SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 1998
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission file number 0-23489
CULTURALACCESSWORLDWIDE, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 52-1309227
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2200 Clarendon Blvd., 11th Floor
Arlington, Virginia 22201
------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 1 (800) 522-3447
Securities registered pursuant to Section 12(b) of the Act:
Title of each class. Name of each exchange on which registered.
None
----
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
-----------------------------
TITLE OF CLASS
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
8,969,834 shares of Common Stock, $.01 par value, as of May 13, 1998
<PAGE>
CULTURALACCESS WORLDWIDE, INC.
INDEX
Part I - Financial Information
Item 1. Financial Statements 1-4
Consolidated and Combined Balance Sheets - As of
March 31, 1998 and December 31, 1997 1
Consolidated and Combined Statements of Operations -
Three Months Ended March 31, 1998 and March 31, 1997 2
Consolidated and Combined Statements of Cash Flows -
Three Months Ended March 31, 1998 and March 31, 1997 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II - Other Information 5-6
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CULTURALACCESSWORLDWIDE, INC.
BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED
CULTURALACCESS-
CONSOLIDATED WORLDWIDE, INC.
CULTURALACCESS- & TLM HOLDINGS
WORLDWIDE, INC. CORP.
DECEMBER 31,
MARCH 31, 1998 1997
-------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ......................... $ 5,284,444 $ 2,014,711
Accounts receivable, net of allowance for
doubtful accounts of $233,746 and $279,935,
respectively .................................... 10,138,619 8,077,462
Deferred issuance costs ........................... -- 1,350,594
Other assets ...................................... 1,327,276 941,686
------------ ------------
Total current assets ............................ 16,750,339 12,384,453
Property and equipment, net ....................... 5,102,519 4,171,806
Other assets ...................................... 545,180 265,110
Intangible assets, net ............................ 35,375,104 35,858,750
------------ ------------
Total assets .................................... $ 57,773,142 $ 52,680,119
============ ============
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED
STOCK AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Amount due on line of credit facility ............. $ -- $ 5,810,000
Accounts payable and accrued expenses ............. 3,836,376 2,831,463
Accrued interest and other related party expenses . 1,397,019 2,974,661
Accrued salaries, wages and related benefits ...... 1,861,717 1,308,446
Due to related parties ............................ 124,733 471,925
Deferred revenue .................................. 946,333 666,082
Current portion of indebtedness ................... 74,131 69,940
Current portion of indebtedness -- related parties 669,421 3,203,819
------------ ------------
Total current liabilities ....................... 8,909,730 17,336,336
Long-term portion of indebtedness ................... 66,707 80,013
Long-term portion of indebtedness -- related parties 711,585 34,238,666
Mandatorily redeemable preferred stock, $.01 par
value: 8% cumulative, 2,000,000 shares
authorized, 65,000 shares and 36,000
shares issued and outstanding at
March 31, 1998 and December 31, 1997,
respectively ...................................... 6,559,443 3,888,000
------------ ------------
Total liabilities and mandatorily
redeemable preferred stock ..................... 16,247,465 55,543,015
------------ ------------
Common stockholders' equity (deficit):
Common stock, $.01 par value: voting: 20,000,000
shares authorized; 8,972,333 and 4,264,000
shares issued at March 31, 1998 and December
31, 1997, respectively; 8,969,834 and 4,261,500
shares outstanding at March 31, 1998 and
December 31, 1997, respectively ................. 89,723 42,640
Common stock, $.01 par value: non-voting:
500,000 shares authorized, issued and
outstanding at December 31, 1997 ................ -- 5,000
Additional paid-in capital ........................ 57,846,547 14,013,092
Accumulated deficit ............................... (16,400,560) (16,913,595)
Less: cost of treasury stock, 2,500 shares ........ (143) (143)
Deferred compensation ............................. (9,890) (9,890)
------------ ------------
Total common stockholders' equity (deficit) ..... 41,525,677 (2,862,896)
------------ ------------
Total liabilities, mandatorily redeemable
preferred stock and common stockholders'
equity (deficit) .............................. $ 57,773,142 $ 52,680,119
============ ============
</TABLE>
1
<PAGE>
CULTURALACCESSWORLDWIDE, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
COMBINED
CULTURALACCESS-
CONSOLIDATED WORLDWIDE, INC.
CULTURALACCESS- & TLM HOLDINGS
WORLDWIDE, INC. CORP.
1998 1997
-------------- ---------------
Revenues ................................... $ 15,691,210 $ 6,962,348
Cost of revenues (exclusive of
depreciation) ............................ 9,109,758 4,064,381
------------ ------------
Gross profit ............................. 6,581,452 2,897,967
Selling, general and adminis-
trative expenses (selling,
general and administrative
expenses paid to related parties
are $224,968, and
$26,667, respectively) .................. 4,804,163 1,391,608
Amortization expense ....................... 400,390 208,518
------------ ------------
Income from operations ................... 1,376,899 1,297,841
Interest income ............................ 51,083 18,106
Interest expense-related parties ........... (496,373) (595,683)
Interest expense ........................... (20,665) --
Other expense-related party ................ -- (304,818)
Other income ............................... -- 4,800
------------ ------------
Income before income
taxes .................................. 910,944 420,246
Income tax expense ......................... 397,909 241,149
------------ ------------
Net income ............................... $ 513,035 $ 179,097
============ ============
Earnings per share of
common stock -- basic and
diluted .................................. $ 0.07 $ 0.04
============ ============
2
<PAGE>
CULTURALACCESSWORLDWIDE, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
COMBINED
CULTURALACCESS-
CONSOLIDATED WORLDWIDE, INC.
CULTURALACCESS- & TLM HOLDINGS
WORLDWIDE, INC. CORP.
1998 1997
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................... $ 513,035 $ 179,097
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization ........................... 686,086 269,172
Interest expense on mandatorily redeemable
preferred stock ....................................... 101,000 72,000
Changes in operating assets and liabilities,
excluding effects from acquisitions:
Accounts receivable ..................................... (2,197,585) (5,068,264)
Due to related parties and affiliates ................... (321,636) 100,965
Other assets ............................................ (707,941) (146,228)
Accounts payable and accrued expenses ................... 965,167 3,089,261
Accrued interest and related party expenses ............. (1,849,447) --
Accrued salaries, wages and related benefits ............ 551,883 --
Deferred revenue ........................................ 482,925 300,216
------------ ------------
Net cash used in operating
activities ........................................... (1,776,513) (1,203,781)
------------ ------------
Cash flows from investing activities:
Additions to property and equipment, net ................. (1,182,393) (108,140)
Use of letter of credit .................................. 15,000,000
Business acquisitions, net of cash
acquired ................................................ -- (6,491,133)
------------ ------------
Net cash (used in) provided by investing activities .... (1,182,393) 8,400,727
------------ ------------
Cash flows from financing activities:
Change in other assets related to deferred
issuance costs........................................... (1,919,328) --
Payments on capital lease ................................ (17,783) (80,150)
Proceeds from notes payable - related
party ................................................... 5,500,000 1,175,000
Proceeds from sale of common and preferred
stock ................................................... 44,640,000 1,999,500
Borrowings under line of credit facility ................. 190,000 5,660,000
Repayments under line of credit facility ................. (6,000,000) (250,000)
Repayment of related party debt ........................ (36,164,250) (15,031,762)
Net cash provided by (used in) financing
activities............................................ 6,228,639 (6,527,412)
------------ ------------
Net increase in cash ................................... 3,269,733 669,534
Cash and cash equivalents, beginning of
period .................................................. 2,014,711 300,387
------------ ------------
Cash and cash equivalents, end of period ................. $ 5,284,444 $ 969,921
============ ============
</TABLE>
3
<PAGE>
CULTURALACCESSWORLDWIDE, INC. AND TLM HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the financial statements
and footnotes included in the Company's Annual Report on Form 10-K.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts included in the financial statements. In the opinion of
management, all adjustments necessary for a fair presentation of this interim
financial information have been included. Such adjustments consisted only of
normal recurring items. The results of operations for the three months ended
March 31, 1998 are not necessarily indicative of the results to be expected for
the year ending December 31, 1998.
2. INITIAL PUBLIC OFFERING OF COMMON STOCK
On February 19, 1998 the Company completed its initial public offering of
4,000,000 shares of common stock at $12.00 per share (the "Offering"). The net
proceeds of the Offering after deducting applicable cost and expenses were
$44,640,000. The proceeds were used to repay approximately $37.6 million in long
term debt. In addition, the 6% convertible promissory note payable to the former
principal stockholders of Phoenix Marketing Group, Inc. ("Phoenix") was
converted into 208,334 shares of common stock.
3. INCOME TAXES
The Company's effective tax rate of 44% in the first quarter of 1998 differs
from the Federal Statutory rate due primarily to state income taxes,
non-deductible goodwill amortization, and non-deductible preferred stock
dividends.
4. EARNINGS PER COMMON SHARE
Earnings per common share are calculated as follows:
For the Three Months Ended March 31,
------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
--------- --------- --------
1998
Basic ................................. $ 513,035 7,567,056 $ 0.07
Effect of dilutive securities:
Stock options ..................... -- 90,896 --
Earnout contingency ............... -- 56,288 --
--------- --------- --------
Earnings per share of common
stock - dilutive .................. $ 513,035 7,714,240 $ 0.07
========= ========= ========
1997
Earnings per share of common
stock - basic and dilutive ........ $ 179,097 4,534,000 $ 0.04
========= ========= ========
4
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Revenues for the first quarter of 1998 increased $8.7 million, or 125%, to $15.7
million, compared to $7.0 million for the same quarter of 1997. Of this
increase, approximately $5.7 million, or 81.5%, resulted from the acquisitions
of Market Connections Group, Inc ("MCG" previously known as Hispanic Market
Connections Group, Inc.) and Phoenix. In addition, approximately $2.9 million of
the increase came from additional services rendered to the 1998 top ten clients.
Cost of revenues increased $5.0 million, or 124%, to $9.1 million for the first
quarter of 1998, from $4.1 million for the first quarter of 1997. The increase
was the result of the acquisitions mentioned above and the additional personnel
costs needed to support the increase in revenues. Cost of revenues as a
percentage of sales declined slightly to 58.1% for the first quarter of 1998,
when compared to 58.4% for the first quarter of 1997.
Selling, general and administrative expenses increased $3.4 million, or 245%, to
$4.8 million for the first quarter of 1998, from $1.4 million for the first
quarter of 1997. Selling, general and administrative expenses as a percentage of
revenues increased to 30.6% for the first quarter of 1998 from 20.0% for the
first quarter of 1997. The increase was primarily driven by the acquisition of
MCG and Phoenix that have a different cost structure than the other businesses.
In addition, the Company has invested in the necessary infrastructure to support
its future growth.
Amortization expense increased $192,000, or 92%, to $400,000 for the first
quarter of 1998, from $209,000 for the first quarter of 1997, due to the
acquisitions of MCG and Phoenix which did not occur until the later part of
1997.
Net interest expense decreased $112,000, or 19.3%, to $466,000 for the first
quarter of 1998, from $578,000 for the first quarter of 1997, as proceeds from
the Offering were used to reduce borrowings.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had a working capital of $7.8 million, an
increase of $12.8 million from ($5.0) million at December 31, 1997. Cash and
cash equivalents were $5.3 million at March 31, 1998 compared to $2.0 million at
December 31, 1997. Both increases are primarily attributable to the proceeds
received from the Offering.
Net cash used for operating activities during the first quarter of 1998 was $1.8
million compared to $1.2 million during the first quarter of 1997. The increase
in the cash used for operating activities for 1998 as compared to 1997 was
primarily the result of accrued interest paid on related party debt.
The net cash used for investing activities during the first quarter of 1998 was
$1.2 million compared to the net cash provided from investing activities for the
first quarter of 1997 of $8.4 million. Cash utilized for capital expenditures
increased by $1.1 million due to the expansion of the Company's facilities and
upgrading of computer systems. During the first quarter of 1997, the Company
used $6.5 million in investing activities to acquire TeleManagement Services
Inc. and received $15.0 million to repay borrowings incurred in connection with
the recapitalization of the Company on December 6, 1996.
On February 19, 1998, the Company raised net proceeds of $44.6 million in the
Offering. The Company expects to meet its short term liquidity requirements
through net cash provided by operations and borrowing under the Credit Facility
(as defined in the Company's Annual Report on Form 10-K). Management believes
that these sources of cash will be sufficient to meet the Company's operating
needs and planned capital expenditures for at least the next 12 months.
5
<PAGE>
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
This report contains certain forward-looking statements which are based on
management's current views and assumptions. These statements are qualified by
reference to "Risk Factors" in the Prospectus in the Company's registration
statement on Form S-1 which lists important factors that could cause actual
results to differ materially from those discussed in this report.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Line of Credit Facility by the Registrant ("Borrower") and
Nations Bank, National Association ("Lender") dated April 9,
1998.
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CULTURALACCESSWORLDWIDE, INC.
Date: __________ By: /s/ John Fitzgerald
-------------------------------
John Fizgerald, President and
Chief Executive Officer
(principal executive officer)
Date: __________ By: /s/ Michael Dinkins
-------------------------------
Michael Dinkins, Senior Vice
President of Finance and Administration
and Chief Financial Officer
(principal financial officer)
6
CREDIT AGREEMENT
by and among
CULTURALACCESSWORLDWIDE, INC.
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION ,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
April 9, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.1. Definitions.........................................................2
1.2. Rules of Interpretation............................................23
ARTICLE II
The Revolving Credit Facility
2.1. Revolving Loans....................................................25
2.2. Payment of Interest................................................26
2.3. Payment of Principal...............................................26
2.4. Manner of Payment..................................................27
2.5. Notes..............................................................27
2.6. Pro Rata Payments..................................................27
2.7. Reductions.........................................................28
2.8. Conversions and Elections of Subsequent Interest Periods...........28
2.9. Increase and Decrease in Amounts...................................29
2.10. Unused Fee.........................................................29
2.11. Deficiency Advances................................................29
2.12. Use of Proceeds....................................................29
2.13. Extension of Stated Termination Date...............................29
ARTICLE III
Security
3.1. Security...........................................................31
3.2. Stock Pledge.......................................................31
3.3. Facility Guaranty..................................................31
3.4. Intellectual Property Security Agreement...........................31
3.5. Further Assurances.................................................31
3.6. Information Regarding Collateral...................................32
<PAGE>
ARTICLE IV
Change in Circumstances
4.1. Increased Cost and Reduced Return..................................33
4.2. Limitation on Types of Loans.......................................34
4.3. Illegality.........................................................34
4.4. Treatment of Affected Loans........................................35
4.5. Compensation.......................................................35
4.6. Taxes..............................................................36
ARTICLE V
Conditions to Making Loans
5.1. Conditions of Initial Advance......................................38
5.2. Conditions of Loans. ..............................................40
ARTICLE VI
Representations and Warranties
6.1. Organization and Authority.........................................42
6.2. Loan Documents.....................................................42
6.3. Solvency...........................................................43
6.4. Subsidiaries and Stockholders......................................43
6.5. Ownership Interests................................................43
6.6. Financial Condition................................................43
6.7. Title to Properties................................................44
6.8. Taxes..............................................................44
6.9. Other Agreements...................................................44
6.10. Litigation.........................................................45
6.11. Margin Stock.......................................................45
6.12. Investment Company.................................................45
6.13. Patents, Etc.......................................................45
6.14. No Untrue Statement................................................45
6.15. No Consents, Etc...................................................46
6.16. Employee Benefit Plans.............................................46
6.17. No Default.........................................................47
6.18. Environmental Laws.................................................47
6.19. Employment Matters.................................................47
6.20. RICO...............................................................48
ii
<PAGE>
6.21. Perfected Security Instruments.....................................48
ARTICLE VII
Affirmative Covenants
7.1. Financial Reports, Etc. ...........................................49
7.2. Maintain Properties................................................50
7.3. Existence, Qualification, Etc. ....................................50
7.4. Regulations and Taxes..............................................51
7.5. Insurance..........................................................51
7.6. True Books.........................................................51
7.7. Right of Inspection................................................51
7.8. Observe all Laws...................................................51
7.9. Governmental Licenses..............................................51
7.10. Covenants Extending to Other Persons...............................52
7.11. Officer's Knowledge of Default.....................................52
7.12. Suits or Other Proceedings.........................................52
7.13. Notice of Environmental Complaint or Condition.....................52
7.14. Environmental Compliance...........................................52
7.15. Indemnification....................................................52
7.16. Further Assurances.................................................53
7.17. Employee Benefit Plans.............................................53
7.18. Continued Operations...............................................54
7.19. New Subsidiaries...................................................54
7.20. Business Credit Diagnostic Examination.............................56
ARTICLE VIII
Negative Covenants
8.1. Financial Covenants................................................57
8.2. Acquisitions.......................................................57
8.3. Liens..............................................................58
8.4. Indebtedness.......................................................59
8.5. Transfer of Assets.................................................60
8.6. Investments........................................................60
8.7. Merger or Consolidation............................................61
8.8. Transactions with Affiliates.......................................61
8.9. Compliance with ERISA..............................................61
8.10. Fiscal Year........................................................62
8.11. Dissolution, etc...................................................62
8.12. Limitations on Sales and Leasebacks................................62
8.13. Change in Control..................................................63
iii
<PAGE>
8.14. Rate Hedging Obligations...........................................63
8.15. Prepayments, Etc. of Indebtedness..................................63
ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default..................................................64
9.2. Agent to Act.......................................................67
9.3. Cumulative Rights..................................................67
9.4. No Waiver..........................................................67
9.5. Allocation of Proceeds.............................................67
ARTICLE X
The Agent
10.1. Appointment, Powers, and Immunities................................69
10.2. Reliance by Agent..................................................69
10.3. Defaults...........................................................70
10.4. Rights as Lender...................................................70
10.5. Indemnification....................................................70
10.6. Non-Reliance on Agent and Other Lenders............................71
10.7. Resignation of Agent...............................................71
10.8. Sharing of Payments, etc...........................................71
10.9. Fees...............................................................72
ARTICLE XI
Miscellaneous
11.1. Assignments and Participations.....................................73
11.2. Notices............................................................74
11.3. Right of Set-off; Adjustments......................................75
11.4. Survival...........................................................76
11.5. Expenses...........................................................76
11.6. Amendments and Waivers.............................................77
11.7. Counterparts.......................................................77
11.8. Termination........................................................77
11.9. Indemnification; Limitation of Liability...........................78
11.10. Severability.......................................................78
11.11. Entire Agreement...................................................79
11.12. Agreement Controls.................................................79
11.13. Usury Savings Clause...............................................79
iv
<PAGE>
11.14. Governing Law; Waiver of Jury Trial................................79
11.15. Payments...........................................................81
EXHIBIT A Applicable Commitment Percentage.........................A-1
EXHIBIT B Form of Assignment and Acceptance........................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized
Representative...........................................C-1
EXHIBIT D Form of Borrowing Notice.................................D-1
EXHIBIT E Form of Interest Rate Selection Notice...................E-1
EXHIBIT F Form of Note.............................................F-1
EXHIBIT G Form of Pledge Agreement.................................G-1
EXHIBIT H Form of Opinion of Borrower's Counsel....................H-1
EXHIBIT I Compliance Certificate...................................I-1
EXHIBIT J Form of Facility Guaranty................................J-1
EXHIBIT K Form of Security Agreement...............................K-1
EXHIBIT L Form of Subordination Provisions.........................L-1
EXHIBIT M Form of Subordination Provisions (Earnouts)..............M-1
Schedule 3.6 Information Regarding Collateral.........................S-1
Schedule 6.4 Subsidiaries and Investments in Other Persons............S-2
Schedule 6.6 Indebtedness.............................................S-3
Schedule 6.7 Liens....................................................S-4
Schedule 6.8 Tax Matters..............................................S-5
Schedule 6.10 Litigation...............................................S-6
Schedule 6.18 Environmental............................................S-7
Schedule 6.21 Perfected Security Instruments...........................S-8
v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 9, 1998 (the "Agreement"), is
made by and among CULTURALACCESSWORLDWIDE, INC., a Delaware corporation having
its principal place of business in Arlington, Virginia (the "Borrower"),
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States, in its capacity as a Lender
("NationsBank"), and each other financial institution executing and delivering a
signature page hereto and each other financial institution which may hereafter
execute and deliver an instrument of assignment with respect to this Agreement
pursuant to Section 11.1 (hereinafter such financial institutions may be
referred to individually as a "Lender" or collectively as the "Lenders"), and
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States, in its capacity as agent for the
Lenders (in such capacity, and together with any successor agent appointed in
accordance with the terms of Section 10.7, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to the
Borrower a revolving credit facility of up to $30,000,000, the proceeds of which
are to be used for general corporate purposes; and
WHEREAS, the Lenders are willing to make such revolving credit facility
available to the Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
1
<PAGE>
ARTICLE I
Definitions and Terms
1.1. Definitions. For the purposes of this Agreement, in addition to the
definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant
or convertible or similar type security to acquire such a controlling
interest at the time it becomes exercisable by the holder thereof),
whether by purchase of such equity interest or upon exercise of an option
or warrant for, or conversion of securities into, such equity interest, or
(ii) assets of another Person which constitute all or substantially all of
the assets of such Person or of a line or lines of business conducted by
such Person.
"Advance" means a borrowing under the Revolving Credit Facility
consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower; or (ii) which beneficially owns or
holds 5% or more of any class of the outstanding voting stock (or in the
case of a Person which is not a corporation, 10% or more of the equity
interest) of the Borrower; or 5% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation, 10%
or more of the equity interest) of which is beneficially owned or held by
the Borrower. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
stock, by contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each
Lender at any time, a fraction, the numerator of which shall be such
Lender's Revolving Credit Commitment and the denominator of which shall be
the Total Revolving Credit Commitment, which Applicable Commitment
Percentage for each Lender as of the Closing Date is as set forth in
Exhibit A; provided that the Applicable Commitment Percentage of each
Lender shall be increased or decreased to reflect any assignments to or by
such Lender effected in accordance with Section 11.1.
"Applicable Lending Office" means, for each Lender and for each Type
of Loan, the "Lending Office" of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or an affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Borrower by
written notice in accordance with the terms hereof as the office by which
its Loans of such Type are to be made and maintained.
2
<PAGE>
"Applicable Margin" means that percent per annum set forth below,
which shall be based upon the Consolidated Leverage Ratio as of the last
day of the fiscal quarter most recently ended as specified below:
Consolidated Applicable Margin for Applicable Margin
Leverage Ratio Base Rate Loans for Eurodollar Loans
-------------- --------------- --------------------
Greater than 3.0 to 1 .375% 2.00%
Less than or equal to 3.0 to 1 .375% 1.75%
and greater than 2.5 to 1
Less than or equal to 2.5 to 1 .25% 1.50%
and greater than 1.5 to 1
Less than or equal to 1.5 to 1 0% 1.25%
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to the
Agent pursuant to Section 7.1(a)(ii) and Section 7.1(b)(ii), subject to
review and approval of such computations by the Agent, and shall be
effective commencing on the fifth Business Day following the date such
certificate is received until the fifth Business Day following the date on
which a new certificate is delivered or is required to be delivered,
whichever shall first occur; provided however, if the Borrower shall fail
to deliver any such certificate within the time period required by Section
7.1, then the Applicable Margin shall be .375% for Base Rate Loans and
2.00% for Eurodollar Rate Loans until the appropriate certificate is so
delivered. From the Closing Date to the first Determination Date, the
Applicable Margin shall be .25% for Base Rate Loans and 2.00% for
Eurodollar Rate Loans.
"Applicable Unused Fee" means that percent per annum set forth
below, which shall be based upon the Consolidated Leverage Ratio as of the
last day of the fiscal quarter most recently ended as specified below:
3
<PAGE>
Consolidated Leverage Ratio Applicable Unused Fee
--------------------------- ---------------------
Greater than 3.0 to 1 .25%
Less than or equal to 3.0 to 1 .25%
and greater than 2.5 to 1
Less than or equal to 2.5 to 1 .20%
and greater than 1.5 to 1
Less than or equal to 1.5 to 1 .20%
The Applicable Unused Fee shall be established at the end of each fiscal
quarter of the Borrower (the "Determination Date"). Any change in the
Applicable Unused Fee following each Determination Date shall be
determined based upon the computations set forth in the certificate
furnished to the Agent pursuant to Section 7.1(a)(ii) and Section
7.1(b)(ii), subject to review and approval of such computations by the
Agent and shall be effective commencing on the fifth Business Day
following the date such certificate is received until the fifth Business
Day following the date on which a new certificate is delivered or is
required to be delivered, whichever shall first occur; provided however,
if the Borrower shall fail to deliver any such certificate within the time
period required by Section 7.1, then the Applicable Unused Fee shall be
.25% until the appropriate certificate is so delivered. From the Closing
Date to the first Determination Date, the Applicable Unused Fee shall be
.20%.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
in the form of Exhibit B (with blanks appropriately filled in) delivered
to the Agent in connection with an assignment of a Lender's interest under
this Agreement pursuant to Section 11.1.
"Authorized Representative" means any of the President or any Vice
President and the Corporate Controller of the Borrower or, with respect to
financial matters, the chief financial officer of the Borrower, or any
other Person expressly designated by the Board of Directors of the
Borrower (or the appropriate committee thereof) as an Authorized
Representative of the Borrower, as set forth from time to time in a
certificate in the form of Exhibit C.
"Base Rate" means, for any day, the rate per annum equal to the sum
of (a) the higher of (i) the Federal Funds Rate for such day plus one-half
of one percent (0.5%) and (ii) the Prime Rate for such day plus (b) the
Applicable Margin. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
4
<PAGE>
"Board" means the Board of Governors of the Federal Reserve System
(or any successor body).
"Borrower's Account" means a demand deposit account number
3918972926 or any successor account with the Agent, which may be
maintained at one or more offices of the Agent or an agent of the Agent.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility in the form of Exhibit D.
"Business Day" means, (i) with respect to any Base Rate Loan, any
day which is not a Saturday, Sunday or a day on which banks in the States
of New York and North Carolina are authorized or obligated by law,
executive order or governmental decree to be closed and, (ii) with respect
to any Eurodollar Rate Loan, any day which is a Business Day, as described
above, and on which the relevant international financial markets are open
for the transaction of business contemplated by this Agreement in London,
England, New York and Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the Borrower and its
Subsidiaries, for any period the sum of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by the
Borrower or any Subsidiary during such period for items that would be
classified as "property, plant or equipment" or comparable items on the
consolidated balance sheet of the Borrower and its Subsidiaries, including
without limitation all transactional costs incurred in connection with
such expenditures provided the same have been capitalized, excluding,
however, the amount of any Capital Expenditures paid for with proceeds of
casualty insurance as evidenced in writing and submitted to the Agent
together with any compliance certificate delivered pursuant to Section
7.1(a) or (b), and (ii) with respect to any Capital Lease entered into by
the Borrower or its Subsidiaries during such period, the present value of
the lease payments due under such Capital Lease over the term of such
Capital Lease applying a discount rate equal to the interest rate provided
in such lease (or in the absence of a stated interest rate, that rate used
in the preparation of the financial statements described in Section
7.1(a)), all the foregoing in accordance with GAAP applied on a Consistent
Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board and
any successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) who, after the Closing Date,
either (A) becomes the "beneficial owner" (as defined in Rule 13d-3
of the Exchange Act ), directly or indirectly, of Voting Stock of
the Borrower (or securities convertible into or
5
<PAGE>
exchangeable for such Voting Stock) representing 30% or more of the
combined voting power of all Voting Stock of the Borrower (on a
fully diluted basis) or (B) otherwise gains the ability, directly or
indirectly, to elect a majority of the board of directors of the
Borrower;
(ii) during any period of up to 24 consecutive months,
commencing on the Closing Date, individuals who at the beginning of
such 24-month period were directors of the Borrower shall cease for
any reason (other than the death, disability or retirement of an
officer of the Borrower that is serving as a director at such time
so long as another officer of the Borrower replaces such Person as a
director) to constitute a majority of the board of directors of the
Borrower; or
(iii) any Person or two or more Persons acting in concert
shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation thereof, will
result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence on the management or
policies of the Borrower.
"Closing Date" means the date as of which this Agreement is executed
by the Borrower, the Lenders and the Agent and on which the conditions set
forth in Section 5.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Collateral" means, collectively, all property of the Borrower, any
Subsidiary or any other Person in which the Agent or any Lender is granted
a Lien as security for all or any portion of the Obligations under any
Security Instrument.
"Consistent Basis" in reference to the application of GAAP means the
accounting principles observed in the period referred to are comparable in
all material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in Section 6.6(a).
"Consolidated Adjusted EBITDA" means, with respect to the Borrower
and its Subsidiaries for any fiscal period ending on the date of
computation thereof, Consolidated EBITDA for such period, adjusted for
projected reductions in owner's and/or senior management compensation,
whether direct or indirect, which are substantiated by employment
contracts; provided, however, the adjustment for reductions in owner's
compensation shall not exceed the lesser of (i) $500,000, subject to the
Agent's right with consent of the Lenders, to approve a greater amount, or
(ii) the actual substantiated amount of the reduction.
6
<PAGE>
"Consolidated Adjusted Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) the sum of (without duplication)
Consolidated Indebtedness (determined as at such date) to (ii) two times
Consolidated Adjusted EBITDA (for the Two-Quarter Period ending on (or
most recently ended prior to) such date.
"Consolidated EBITDA" means, with respect to the Borrower and its
Subsidiaries for any fiscal period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Net Income,
(ii) Consolidated Interest Expense, (iii) taxes on income, (iv)
amortization, and (v) depreciation, all determined on a consolidated basis
in accordance with GAAP applied on a Consistent Basis; provided, however,
that with respect to an Acquisition that is accounted for as a "purchase",
for the Four-Quarter Period ending next following the date of such
Acquisition, Consolidated EBITDA shall include the results of operations
of the Person or assets so acquired, which amounts shall be determined on
a historical pro forma basis as if such Acquisition had been consummated
as a "pooling of interests".
"Consolidated Fixed Charge Ratio" means, with respect to the
Borrower and its Subsidiaries for any Two-Quarter Period ending on the
date of computation thereof, the ratio of (i) Consolidated EBITDA plus
Consolidated Lease Payments less (without duplication) the sum of Capital
Expenditures and Restricted Payments, to (ii) Consolidated Fixed Charges.
"Consolidated Fixed Charges" means, with respect to Borrower and its
Subsidiaries for any fiscal period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Interest
Expense, (ii) current maturities of Consolidated Indebtedness, (iii)
income taxes accrued during such period, (iv) Consolidated Lease Payments
for such period and (v) all Restricted Payments for the period of
determination, all determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Indebtedness" means all Indebtedness of the Borrower
and its Subsidiaries, all determined on a consolidated basis.
"Consolidated Interest Coverage Ratio" means, with respect to the
Borrower and its Subsidiaries for any Four-Quarter Period ending on the
date of computation thereof, the ratio of (i) Consolidated EBITDA, to (ii)
Consolidated Interest Expense.
"Consolidated Interest Expense" means, with respect to any period of
computation thereof, the gross interest expense of the Borrower and its
Subsidiaries, including without limitation (i) the current amortized
portion of debt discounts to the extent included in gross interest
expense, (ii) the current amortized portion of all fees (including fees
payable in respect of any Swap Agreement) payable in connection with the
incurrence of Indebtedness to the extent included in gross interest
expense and (iii) the portion of any payments made
7
<PAGE>
in connection with Capital Leases allocable to interest expense, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Lease Payments" means the gross amount of all lease or
rental payments, whether or not characterized as rent, of the Borrower and
its Subsidiaries, excluding payments in respect of Capital Leases
constituting Indebtedness, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Leverage Ratio" means, as of the date of computation
thereof, the ratio of (i) the sum of (without duplication) Consolidated
Indebtedness (determined as at such date) to (ii) two times Consolidated
EBITDA (for the Two-Quarter Period ending on (or most recently ended prior
to) such date).
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries (including payments received by the Borrower and its
Subsidiaries of (i) interest income, and (ii) dividends and distributions
made in the ordinary course of their businesses by Persons in which
investment is permitted pursuant to this Agreement and not related to an
extraordinary event), less all operating and non-operating expenses of the
Borrower and its Subsidiaries including taxes on income, all determined on
a consolidated basis in accordance with GAAP applied on a Consistent
Basis; but excluding (for all purposes other than compliance with Section
8.1(a) hereof) as income: (i) net gains on the sale, conversion or other
disposition of capital assets, (ii) net gains on the acquisition,
retirement, sale or other disposition of capital stock and other
securities of the Borrower or its Subsidiaries, (iii) net gains on the
collection of proceeds of life insurance policies, (iv) any write-up of
any asset, and (v) any other net gain or credit of an extraordinary nature
as determined in accordance with GAAP applied on a Consistent Basis.
"Consolidated Net Worth" means, as of any date on which the amount
thereof is to be determined, Consolidated Shareholders' Equity minus
(without duplication of deductions in respect of items already deducted in
arriving at surplus and retained earnings) all reserves (other than
contingency reserves not allocated to any particular purpose), including
without limitation reserves for depreciation, depletion, amortization,
obsolescence, deferred income taxes, insurance and inventory valuation all
as determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Senior Funded Debt" means, as of any date on which the
amount thereof is to be determined, Consolidated Indebtedness less
Subordinated Indebtedness.
"Consolidated Senior Funded Debt to Adjusted EBITDA Ratio" means, as
of the date of computation thereof, the ratio of (i) Consolidated Senior
Funded Debt (determined as at such date), to (ii) two times Consolidated
Adjusted EBITDA (for the Two-Quarter Period ending on (or most recently
ended prior to) such date).
8
<PAGE>
"Consolidated Shareholders' Equity" means, as of any date on which
the amount thereof is to be determined, the sum of the following in
respect of the Borrower and its Subsidiaries (determined on a consolidated
basis and excluding any upward adjustment after the Closing Date due to
revaluation of assets): (i) the amount of issued and outstanding share
capital, plus (ii) the amount of additional paid-in capital and retained
earnings (or, in the case of a deficit, minus the amount of such deficit),
plus (iii) the amount of any foreign currency translation adjustment (if
positive, or, if negative, minus the amount of such translation
adjustment), minus (iv) the amount of any treasury stock, all as
determined in accordance with GAAP applied on a Consistent Basis.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the financial statements (including
footnotes) of such Person in accordance with GAAP applied on a Consistent
Basis, including Statement No. 5 of the Financial Accounting Standards
Board, all Rate Hedging Obligations and any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or other
obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including obligations of such Person
however incurred:
(1) to purchase such Indebtedness or other obligation or any
property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or
(ii) to maintain a minimum working capital, net worth or other
balance sheet condition or any income statement condition of the
primary obligor;
(3) to grant or convey any lien, security interest, pledge,
charge or other encumbrance on any property or assets of such Person
to secure payment of such Indebtedness or other obligation;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the owner
or holder of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or other
obligation; or
(5) otherwise to assure the owner of the Indebtedness or such
obligation of the primary obligor against loss in respect thereof.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.8 hereof of a Eurodollar Rate Loan of
one Type as a Eurodollar Rate Loan of the same Type from one Interest
Period to the next Interest Period.
9
<PAGE>
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 2.8 of one Type of Loan into another Type of Loan.
"Cost of Acquisition" means, with respect to any Acquisition, as at
the date of entering into any agreement therefor, the sum of the following
(without duplication): (i) the value of the capital stock, warrants or
options to acquire capital stock of Borrower or any Subsidiary to be
transferred in connection therewith (other than issuances pursuant to
stock option plans as compensation), (ii) the amount of any cash and fair
market value of other property (excluding property described in clause (i)
and the unpaid principal amount of any debt instrument) given as
consideration, (iii) the amount (determined by using the face amount or
the amount payable at maturity, whichever is greater) of any Indebtedness
incurred, assumed or acquired by the Borrower or any Subsidiary in
connection with such Acquisition, excluding, however, Indebtedness
incurred hereunder in connection with the Acquisition, (iv) all additional
purchase price amounts in the form of earnouts and other contingent
obligations that should be recorded as purchase price on the financial
statements of the Borrower and its Subsidiaries in accordance with GAAP,
(v) all amounts paid in respect of covenants not to compete, consulting
agreements and other affiliated contracts in connection with such
Acquisition that should be recorded as purchase price on financial
statements of the Borrower and its Subsidiaries in accordance with GAAP,
and (vi) the aggregate fair market value of all other consideration given
by the Borrower or any Subsidiary in connection with such Acquisition that
should be recorded as purchase price on financial statements of the
Borrower and its Subsidiaries in accordance with GAAP. For purposes of
determining the Cost of Acquisition for any transaction, (A) the capital
stock of the Borrower shall be valued (I) in the case of capital stock
that is then designated as a national market system security by the
National Association of Securities Dealers, Inc. ("NASDAQ") or is listed
on a national securities exchange, the average of the last reported bid
and ask quotations or the last prices reported thereon, and (II) with
respect to shares that are not freely tradeable, as determined by the
Board of Directors of the Borrower and, if requested by the Agent,
determined to be a reasonable valuation by the independent public
accountants referred to in Section 7.1(a), (B) the capital stock of any
Subsidiary shall be valued as determined by the Board of Directors of such
Subsidiary and, if requested by the Agent, determined to be a reasonable
valuation by the independent public accountants referred to in Section
7.1(a), and (C) with respect to any Acquisition accomplished pursuant to
the exercise of options or warrants or the conversion of securities, the
Cost of Acquisition shall include both the cost of acquiring such option,
warrant or convertible security as well as the cost of exercise or
conversion.
"Credit Party" means, collectively, the Borrower, each Guarantor and
each other Person providing Collateral pursuant to any Security
Instrument.
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of
Default hereunder.
10
<PAGE>
"Default Rate" means (i) with respect to each Eurodollar Rate Loan,
until the end of the Interest Period applicable thereto, a rate of two
percent (2%) above the Eurodollar Rate applicable to such Loan, and
thereafter at a rate of interest per annum which shall be two percent (2%)
above the Base Rate, (ii) with respect to Base Rate Loans, at a rate of
interest per annum which shall be two percent (2%) above the Base Rate and
(iii) in any case, the maximum rate permitted by applicable law, if lower.
"Direct Foreign Subsidiary" means any Foreign Subsidiary a majority
of whose outstanding Voting Stock is owned by the Borrower or a Domestic
Subsidiary.
"Dollars" and the symbol "$" means dollars constituting legal tender
for the payment of public and private debts in the United States of
America.
"Domestic Subsidiary" means any Subsidiary which is organized under
the laws of one of the states comprising the United States of America.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
Lender, and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any assignment
is effected in accordance with Section 11.1, the Borrower, such approval
not to be unreasonably withheld or delayed by the Borrower and such
approval to be deemed given by the Borrower within two Business Days after
notice of such proposed assignment has been provided by the assigning
Lender to the Borrower; provided, however, that neither the Borrower nor
an affiliate of the Borrower shall qualify as an Eligible Assignee.
"Eligible Securities" means the following obligations and any other
obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the laws of
any state of the United States of America or under the laws of any
other nation, payable in the United States of America, expressed to
mature not later than 92 days following the date of issuance thereof
and rated in an investment grade rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued by any
Lender or certificates of deposit maturing within one year from the
date of issuance thereof and issued by a bank or trust company
organized under the laws of the United States or of any state
thereof having capital surplus and undivided profits aggregating at
least $400,000,000 and being rated "A-3" or better by S&P or "A" or
better by Moody's;
(d) Repurchase Agreements;
11
<PAGE>
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in obligations
described in paragraphs (a) through (f) above, the shares of which
mutual funds are at all times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred stock
issued by a Person having a rating of its long term unsecured debt
of "A" or better by S&P or "A-3" or better by Moody's; and
(i) asset-backed remarketed certificates of participation
representing a fractional undivided interest in the assets of a
trust, which certificates are rated at least "A-1" by S&P and "P-1"
by Moody's.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (i) is maintained for employees of
the Borrower or any of its ERISA Affiliates or is assumed by the Borrower
or any of its ERISA Affiliates in connection with any Acquisition or (ii)
has at any time been maintained for the employees of the Borrower or any
current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree, permit or license
regulating, relating to, or imposing liability or standards of conduct
concerning, any environmental matters or conditions, environmental
protection or conservation, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended; the Superfund Amendments and Reauthorization Act of
1986, as amended; the Resource Conservation and Recovery Act, as amended;
the Toxic Substances Control Act, as amended; the Clean Air Act, as
amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person or
trade or business which is a member of a group which is under common
control with the Borrower, who together with the Borrower, is treated as a
single employer within the meaning of Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Eurodollar Rate.
12
<PAGE>
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
Rate ----------------------------- Margin
1- Reserve Requirement
"Event of Default" means any of the occurrences set forth as such in
Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Facility Guaranty" means each Guaranty and Suretyship Agreement
between one or more Guarantors and the Agent for the benefit of the
Lenders, delivered as of the Closing Date and otherwise pursuant to
Section 7.19, as the same may be amended, modified or supplemented.
"Facility Termination Date" means such date as all of the following
shall have occurred: (a) the Borrower shall have permanently terminated
the Revolving Credit Facility by payment in full of all Revolving Credit
Outstandings, together with all accrued and unpaid interest thereon, (b)
all Swap Agreements shall have been terminated, expired or cash
collateralized, (c) all Revolving Credit Commitments shall have terminated
or expired and (d) the Borrower shall have fully, finally and irrevocably
paid and satisfied in full all Obligations (other than Obligations
consisting of continuing indemnities and other contingent Obligations of
the Borrower or any Guarantor that may be owing to the Lenders pursuant to
the Loan Documents and expressly survive termination of this Agreement).
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so published
on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent (in its individual
capacity) on such day on such transactions as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the Borrower
and its Subsidiaries commencing on January 1 of each calendar year and
ending on December 31 of each calendar year.
"Foreign Benefit Law" means any applicable statute, law, ordinance,
code, rule, regulation, order or decree of any foreign nation or any
province, state, territory, protectorate
13
<PAGE>
or other political subdivision thereof regulating, relating to, or
imposing liability or standards of conduct concerning, any Employee
Benefit Plan.
"Foreign Subsidiary" means any Subsidiary organized under the laws
of any jurisdiction other than one of the states comprising the United
States of America, any territory thereof or the District of Columbia.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower and its Subsidiaries, taken together as one
accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles, being those principles of accounting set
forth in pronouncements of the Financial Accounting Standards Board, the
American Institute of Certified Public Accountants or which have other
substantial authoritative support and are applicable in the circumstances
as of the date of a report.
"Government Securities" means direct obligations of, or obligations
the timely payment of principal and interest on which are fully and
unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state, municipal,
national or other governmental department, commission, board, bureau,
court, agency or instrumentality or political subdivision thereof or any
entity or officer exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any government or any
court, in each case whether associated with a state of the United States,
the United States, or a foreign entity or government.
"Guaranties" means all obligations of the Borrower or any Subsidiary
directly or indirectly guaranteeing, or in effect guaranteeing, any
Indebtedness or other obligation of any other Person.
"Guarantors" means, at any date, the Subsidiaries who are required
to be parties to a Facility Guaranty at such date.
"Hazardous Material" means and includes any pollutant, contaminant,
or hazardous, toxic or dangerous waste, substance or material (including
without limitation petroleum products, asbestos-containing materials and
lead), the generation, handling, storage, transportation, disposal,
treatment, release, discharge or emission of which is subject to any
Environmental Law.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of such
Person for the acquisition of property or arising under Rate Hedging
Obligations, all indebtedness secured by any Lien on the property of such
Person whether or not such indebtedness is assumed, all liability of
14
<PAGE>
such Person by way of endorsements (other than for collection or deposit
in the ordinary course of business), all Guaranties, that portion of
obligations with respect to Capital Leases and other items which in
accordance with GAAP is required to be classified as a liability on a
balance sheet; but excluding all accounts payable in the ordinary course
of business so long as payment therefor is due within one year; provided
that in no event shall the term Indebtedness include surplus and retained
earnings, lease obligations (other than pursuant to Capital Leases),
reserves for deferred income taxes and investment credits, other deferred
credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any Person,
without duplication, all indebtedness in respect of money borrowed,
including without limitation all Capital Leases, all accrued but unpaid
liabilities under earn out agreements, and the deferred purchase price of
any property or asset, evidenced by a promissory note, bond, debenture or
similar written obligation for the payment of money (including conditional
sales or similar title retention agreements), other than trade payables
incurred in the ordinary course of business.
"Intellectual Property Assignments" means those certain Assignments
of Patents, Trademarks, Copyrights and Licenses in the form attached to
the Intellectual Property Security Agreement as Exhibit A, to be filed
upon acceleration of the Obligations hereunder, as from time to time
amended, supplemented or restated.
"Intellectual Property Security Agreement" means collectively (or
individually as the context may indicate), (i) the Intellectual Property
Security Agreement dated as of the date hereof by the Borrower to the
Agent, and (ii) any additional Intellectual Property Security Agreement
delivered to the Agent pursuant to Section 7.19, as hereafter modified,
amended or supplemented from time to time.
"Interbank Offered Rate" means, with respect to any Eurodollar Rate
Loan for the Interest Period applicable thereto, the rate per annum
(rounded upwards, if necessary), to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "Interbank Offered Rate" shall mean, with respect to
any Eurodollar Rate Loan for the Interest Period applicable thereto, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate
for deposits in Dollars at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period, provided, however; if more than one
rate is specified on Reuters Screen LIBO Page, the applicable rate shall
be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%).
15
<PAGE>
"Interest Period" means, for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or Converted and
ending, at the Borrower's option, on the date one, two, three or four
months thereafter as notified to the Agent by the Authorized
Representative three (3) Business Days prior to the beginning of such
Interest Period; provided, that,
(i) if the Authorized Representative fails to notify the
Agent of the length of an Interest Period three (3) Business Days
prior to the first day of such Interest Period, the Eurodollar Rate
Loan for which such Interest Period was to be determined shall be
deemed to be a Base Rate Loan as of the first day thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan would
end on a day which is not a Business Day, such Interest Period shall
be extended to the next Business Day (unless such extension would
cause the applicable Interest Period to end in the succeeding
calendar month, in which case such Interest Period shall end on the
next preceding Business Day);
(iii) any Interest Period which begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a
calendar month;
(iv) no Interest Period shall extend past the Stated
Termination Date; and
(v) there shall not be more than three (3) Interest Periods in
effect on any day.
"Interest Rate Selection Notice" means the written notice delivered
by an Authorized Representative in connection with the election of a
subsequent Interest Period for any Eurodollar Rate Loan or the Conversion
of any Eurodollar Rate Loan into a Base Rate Loan or the Conversion of any
Base Rate Loan into a Eurodollar Rate Loan, in the form of Exhibit E.
"Lien" means any interest in property securing any obligation owed
to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and
including but not limited to the lien or security interest arising from a
mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes.
For the purposes of this Agreement, the Borrower and any Subsidiary shall
be deemed to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, financing lease, or other
arrangement pursuant to which title to the property has been retained by
or vested in some other Person for security purposes.
16
<PAGE>
"Loan" or "Loans" means any borrowing pursuant to an Advance under
the Revolving Credit Facility.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, and all other instruments and
documents heretofore or hereafter executed or delivered to or in favor of
any Lender or the Agent in connection with the Loans made and transactions
contemplated under this Agreement, as the same may be amended,
supplemented or replaced from the time to time.
"Loan Parties" means the Borrower and the Guarantor(s).
"Material Adverse Effect" means a material adverse effect on (i) the
business, properties, operations or condition, financial or otherwise, of
the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of
any Credit Party to pay or perform its respective obligations, liabilities
and indebtedness under the Loan Documents as such payment or performance
becomes due in accordance with the terms thereof, or (iii) the rights,
powers and remedies of the Agent or any Lender under any Loan Document or
the validity, legality or enforceability thereof.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate
is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions within the preceding six
(6) Fiscal Years.
"Municipal Obligations" means general obligations issued by, and
supported by the full taxing authority of, any state of the United States
of America or of any municipal corporation or other public body organized
under the laws of any such state which are rated in the highest investment
rating category by both S&P and Moody's.
"Notes" means, collectively, the promissory notes of the Borrower
evidencing Loans executed and delivered to the Lenders substantially in
the form of Exhibit F.
"Obligations" means the obligations, liabilities and Indebtedness of
the Borrower with respect to (i) the principal and interest on the Loans
as evidenced by the Notes, (ii) all liabilities of the Borrower to any
Lender which arise under a Swap Agreement, and (iii) the payment and
performance of all other obligations, liabilities and Indebtedness of the
Borrower to the Lenders or the Agent hereunder, under any one or more of
the other Loan Documents or with respect to the Loans.
"Operating Documents" means with respect to any corporation, limited
liability company, partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or unincorporated
entity, the bylaws, operating agreement,
17
<PAGE>
partnership agreement, limited partnership agreement or other applicable
documents relating to the operation, governance or management of such
entity.
"Organizational Action" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, any corporate, organizational or partnership action
(including any required shareholder, member or partner action), or other
similar official action, as applicable, taken by such entity.
"Organizational Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the articles of incorporation, certificate of
incorporation, articles of organization, certificate of limited
partnership or other applicable organizational or charter documents
relating to the creation of such entity.
"Outstandings" means, collectively, at any date, the Revolving
Credit Outstandings on such date.
"Partnership Interests" shall have the meaning therefor provided in
the Pledge Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which
is subject to the provisions of Title IV of ERISA or Section 412 of the
Code and which (i) is maintained for employees of the Borrower or any of
its ERISA Affiliates or is assumed by the Borrower or any of its ERISA
Affiliates in connection with any Acquisition or (ii) has at any time been
maintained for the employees of the Borrower or any current or former
ERISA Affiliate.
"Person" means an individual, partnership, corporation, limited
liability company, limited liability partnership, trust, unincorporated
organization, association, joint venture or a government or agency or
political subdivision thereof.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) that certain Stock Pledge Agreement dated as of
the date hereof between the Borrower and the Agent for the benefit of the
Agent and the Lenders, and (ii) any additional Stock Pledge Agreement in
the form of Exhibit G delivered to the Agent pursuant to Section 7.19, as
hereafter amended, supplemented or replaced from time to time.
"Pledged Stock" has the meaning given to such term in the Pledge
Agreement.
"Pre-Refunded Municipal Obligations" means obligations of any state
of the United States of America or of any municipal corporation or other
public body organized under the
18
<PAGE>
laws of any such state which are rated, based on the escrow, in the
highest investment rating category by both S&P and Moody's and which have
been irrevocably called for redemption and advance refunded through the
deposit in escrow of Government Securities or other debt securities which
are (i) not callable at the option of the issuer thereof prior to
maturity, (ii) irrevocably pledged solely to the payment of all principal
and interest on such obligations as the same becomes due and (iii) in a
principal amount and bear such rate or rates of interest as shall be
sufficient to pay in full all principal of, interest, and premium, if any,
on such obligations as the same becomes due as verified by a nationally
recognized firm of certified public accountants.
"Prime Rate" means the per annum rate of interest established from
time to time by NationsBank as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of NationsBank,
presently located at Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such other
office and address as the Agent may from time to time designate.
"Rate Hedging Obligations" means any and all obligations of the
Borrower or any Subsidiary, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable
to such party's assets, liabilities or exchange transactions, including,
but not limited to, Dollar-denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest
rate options, puts, warrants and those commonly known as interest rate
"swap" agreements; and (ii) any and all cancellations, buybacks,
reversals, terminations or assignments of any of the foregoing.
"Registration Statement" means the Registration Statement on Form
S-1 No. 333- 38845, as amended by Amendments dated December 3, 1997,
December 11, 1997, January 26, 1998, January 27, 1998, February 10, 1998,
and February 12, 1998.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Regulatory Change" means any change effective after the Closing
Date in United States federal or state laws or regulations (including
Regulation D and capital adequacy regulations) or foreign laws or
regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state or foreign laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged
19
<PAGE>
with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy, including
those relating to "highly leveraged transactions," whether or not having
the force of law, and whether or not failure to comply therewith would be
unlawful and whether or not published or proposed prior to the date
hereof.
"Repurchase Agreement" means a repurchase agreement entered into
with any financial institution whose debt obligations or commercial paper
are rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by
Moody's.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating (i) if there shall
be fewer than three (3) Lenders, 100% of the aggregate Credit Exposures of
all Lenders on such date, and (ii) if there shall be three (3) or more
Lenders, at least 66-2/3% of the aggregate Credit Exposures of all the
Lenders on such date. For purposes of the preceding sentence, the amount
of the "Credit Exposure" of each Lender shall be equal at all times (a)
other than following the occurrence and during the continuance of an Event
of Default, to its Revolving Credit Commitment, and (b) following the
occurrence and during the continuance of an Event of Default, to the
aggregate principal amount of such Lender's Applicable Commitment
Percentage of Revolving Credit Outstandings; provided that, for the
purpose of this definition only, if any Lender shall have failed to fund
its Applicable Commitment Percentage of any Advance, the Revolving Credit
Commitment of such Lender shall be deemed reduced by the amount it so
failed to fund for so long as such failure shall continue and such
Lender's Credit Exposure attributable to such failure shall be deemed held
by any Lender making more than its Applicable Commitment Percentage of
such Advance to the extent it covers such failure.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) by member banks of the Federal
Reserve System against "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by
such member banks with respect to (i) any category of liabilities which
includes deposits by reference to which the Eurodollar Rate is to be
determined, or (ii) any category of extensions of credit or other assets
which include Eurodollar Rate Loans. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of
Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower or from one Subsidiary to another
Subsidiary) now or hereafter outstanding, except a dividend payable solely
in shares of a class of stock to the holders of that class; (b) any
redemption, conversion, exchange, retirement or similar payment, purchase
or other acquisition for value, direct or indirect, of
20
<PAGE>
any shares of any class of stock of Borrower or any of its Subsidiaries
(other than those payable or distributable solely to the Borrower) now or
hereafter outstanding; (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; and (d) any issuance and sale of capital stock of
any Subsidiary of the Borrower (or any option, warrant or right to acquire
such stock) other than to the Borrower.
"Revolving Credit Commitment" means, with respect to each Lender,
the obligation of such Lender to make Loans to the Borrower up to an
aggregate principal amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total Revolving Credit
Commitment.
"Revolving Credit Facility" means the facility described in Article
II hereof providing for Loans to the Borrower by the Lenders in the
aggregate principal amount of the Total Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Loans then
outstanding.
"Revolving Credit Termination Date" means (i) the Stated Termination
Date or (ii) such earlier date of termination of Lenders' obligations
pursuant to Section 9.1 upon the occurrence of an Event of Default, or
(iii) such date as the Borrower may voluntarily and permanently terminate
the Revolving Credit Facility by payment in full of all Revolving Credit
Outstandings, together with all accrued and unpaid interest thereon.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill.
"Security Agreement" means, collectively (or individually as the
context may indicate), (i) the Security Agreement dated as of the date
hereof by the Borrower to the Agent, and (ii) any additional Security
Agreement delivered to the Agent pursuant to Section 7.19, as hereafter
modified, amended or supplemented from time to time.
"Security Instruments" means, collectively, the Pledge Agreement,
the Security Agreement, the Intellectual Property Security Agreement, and
all other agreements, instruments and other documents, whether now
existing or hereafter in effect, pursuant to which the Borrower or any
Subsidiary shall grant or convey to the Agent or the Lenders a Lien in
property as security for all or any portion of the Obligations, as any of
them may be amended, modified or supplemented from time to time.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA and
which is not a Multiemployer Plan.
21
<PAGE>
"Solvent" means, when used with respect to any Person, that at the
time of determination:
(i) the fair value of its assets (both at fair valuation and
at present fair saleable value on an orderly basis) is in excess of
the total amount of its liabilities, including Contingent
Obligations; and
(ii) it is then able and expects to be able to pay its debts
as they mature; and
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Stated Termination Date" means April 9, 2001 or such later date as
the parties may agree pursuant to Section 2.13.
"Subordinated Indebtedness" means Indebtedness of the Borrower or
its Subsidiaries containing subordination provisions similar to those set
forth in Exhibit L hereto or in the case of earnout arrangements, Exhibit
M; provided, however, that so long as no Default or Event of Default
exists under Section 9.1(a) or (b) hereof, up to $5,000,000 of
Subordinated Indebtedness may exist containing provisions which limit the
period to one year or greater during which the holder of such Subordinated
Indebtedness is prohibited from taking any action to collect or enforce
payment of such Indebtedness.
"Subsidiary" means any corporation or other entity in which more
than 50% of its outstanding voting stock or more than 50% of all equity
interests is owned directly or indirectly by the Borrower and/or by one or
more of the Borrower's Subsidiaries.
"Swap Agreement" means one or more agreements between the Borrower
and any Person with respect to Indebtedness evidenced by any or all of the
Notes, on terms mutually acceptable to Borrower and such Person and
approved by each of the Lenders, which agreements create Rate Hedging
Obligations; provided, however, that no such approval of the Lenders shall
be required to the extent such agreements are entered into between the
Borrower and any Lender.
"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the
notice requirement has been waived by applicable regulation or otherwise);
or (ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA or was deemed such under Section
4062(e) of ERISA but only if such withdrawal reasonably can be expected to
have a Material Adverse Effect; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041
of ERISA; or (iv) the institution of proceedings to terminate a Pension
Plan by the
22
<PAGE>
PBGC; or (v) any other event or condition which would constitute grounds
under Section 4042(a) of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; or (vi) the partial or
complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan but only if such withdrawal reasonably can be expected
to have a Material Adverse Effect; or (vii) the imposition of a Lien
pursuant to Section 412 of the Code or Section 302 of ERISA; or (viii) any
event or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA. Notwithstanding the foregoing, a Termination
Event will only occur if the Borrower or any ERISA Affiliate incurs
liability to the PBGC or to a participant in a Pension Plan as a result of
the events described in (i) through (ix) above.
"Total Revolving Credit Commitment" means a principal amount equal
to $30,000,000, as reduced from time to time in accordance with Section
2.7.
"Two-Quarter Period" means a period of two full consecutive fiscal
quarters of the Borrower and its Subsidiaries, taken together as one
accounting period.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or a
Eurodollar Rate Loan).
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote
for the election of directors (or persons performing similar functions) of
such Person, even if the right so to vote has been suspended by the
happening of such a contingency.
1.2. Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall have
the meanings assigned to such terms and shall be interpreted in accordance
with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Virginia Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of
another jurisdiction is controlling, in which case such terms shall have
the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used herein or
in any other Loan Document are solely for convenience of reference and
shall not constitute a part of any such document or affect the meaning,
construction or effect of any provision thereof.
23
<PAGE>
(d) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses,
annexes, appendices, exhibits and schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan Document
shall apply to the singular as well as the plural form of such defined
term, and all references to the masculine gender shall include reference
to the feminine or neuter gender, and vice versa, as the context may
require.
(f) When used herein or in any other Loan Document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary, refer
to the whole of the applicable document and not to any particular article,
section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting the
generality of any description preceding such term, and for purposes hereof
the rule of ejusdem generis shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters,
to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to such
dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and its counsel have
reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule of construction that
ambiguities are to be resolved against the drafting party shall be
inapplicable in the construing and interpretation of the Loan Documents
and all exhibits, schedules and appendices thereto.
(j) Any reference to an officer of the Borrower or any other Person
by reference to the title of such officer shall be deemed to refer to each
other officer of such Person, however titled, exercising the same or
substantially similar functions.
(k) All references to any agreement or document as amended, modified
or supplemented, or words of similar effect, shall mean such document or
agreement, as the case may be, as amended, modified or supplemented from
time to time only as and to the extent permitted therein and in the Loan
Documents.
24
<PAGE>
ARTICLE II
The Revolving Credit Facility
2.1. Revolving Loans.
(a) Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, provided, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Agent has accelerated
the maturity of any of the Notes as a result of an Event of Default; provided
further, however, that immediately after giving effect to each such Advance, the
amount of Revolving Credit Outstandings shall not exceed the Total Revolving
Credit Commitment. Within such limits, the Borrower may borrow, repay and
reborrow under the Revolving Credit Facility on a Business Day from the Closing
Date until, but (as to borrowings and reborrowings) not including, the Revolving
Credit Termination Date; provided, however, that (y) no Loan that is a
Eurodollar Rate Loan shall be made which has an Interest Period that extends
beyond the Stated Termination Date and (z) each Loan that is a Eurodollar Rate
Loan may, subject to the provisions of Section 2.7, be repaid only on the last
day of the Interest Period with respect thereto unless such payment is
accompanied by the additional payment, if any, required by Section 4.5.
(b) Amounts. Except as otherwise permitted by the Lenders from time
to time, the amount of Revolving Credit Outstandings shall not exceed at any
time the Total Revolving Credit Commitment, and, in the event there shall be
outstanding any such excess, the Borrower shall immediately make such payments
and prepayments as shall be necessary to comply with this restriction. Each Loan
hereunder, and each Conversion under Section 2.8, shall be in an amount of at
least $500,000, and, if greater than $500,000, an integral multiple of $10,000.
(c) Advances. (i) An Authorized Representative shall give the Agent
(1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Loan that is a Eurodollar Rate Loan (whether representing an additional
borrowing hereunder or the Conversion of a borrowing hereunder from Base Rate
Loans to Eurodollar Rate Loans) prior to 10:30 A.M. and (2) irrevocable written
notice by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective upon
receipt, of each Loan that is a Base Rate Loan (whether representing an
additional borrowing hereunder or the Conversion of borrowing hereunder from
Eurodollar Rate Loans to Base Rate Loans) prior to 10:30 A.M. on the day of such
proposed Loan. Each such notice shall specify the amount of the borrowing, the
type of Loan (Base Rate or Eurodollar Rate), the date of borrowing and, if a
Eurodollar Rate Loan, the Interest Period to be used in the computation of
interest. Notice of receipt of such Borrowing Notice or Interest Rate Selection
Notice, as the case may be, together
25
<PAGE>
with the amount of each Lender's portion of an Advance requested thereunder,
shall be provided by the Agent to each Lender by telefacsimile transmission with
reasonable promptness, but (provided the Agent shall have received such notice
by 10:30 A.M.) not later than 1:00 P.M. on the same day as the Agent's receipt
of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this Section 2.1, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Advance or Advances to
be made by it on such day available by wire transfer to the Agent in the amount
of its pro rata share, determined according to such Lender's Applicable
Commitment Percentage of the Loan or Loans to be made on such day. Such wire
transfer shall be directed to the Agent at the Principal Office and shall be in
the form of Dollars constituting immediately available funds. The amount so
received by the Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower in immediately available funds by
delivery of the proceeds thereof to the Borrower's Account or otherwise as shall
be directed in the applicable Borrowing Notice by the Authorized Representative.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to Convert the Loans in
accordance with Section 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, provided, however, there shall not be outstanding
at any one time Eurodollar Rate Loans having more than three (3) different
Interest Periods. If the Agent does not receive a Borrowing Notice or an
Interest Rate Selection Notice giving notice of election of the duration of an
Interest Period or of Conversion of any Loan to or Continuation of a Loan as a
Eurodollar Rate Loan by the time prescribed by Section 2.1(c) or 2.8, the
Borrower shall be deemed to have elected to Convert such Loan to (or Continue
such Loan as) a Base Rate Loan until the Borrower notifies the Agent in
accordance with Section 2.8.
2.2. Payment of Interest. (a) The Borrower shall pay interest to the Agent
for the account of each Lender on the outstanding and unpaid principal amount of
each Loan made by such Lender for the period commencing on the date of such Loan
until such Loan shall be due at the then applicable Base Rate for Base Rate
Loans or applicable Eurodollar Rate for Eurodollar Rate Loans, as designated by
the Authorized Representative pursuant to Section 2.1; provided, however, that
if any Event of Default shall occur and be continuing, all amounts outstanding
under the Loans shall bear interest thereafter at the Default Rate.
(b) Interest on each Loan shall be computed on the basis of a year
of 360 days and calculated in each case for the actual number of days elapsed.
Interest on each Loan shall be paid (i) quarterly in arrears on the last
Business Day of each March, June, September and December, commencing June 30,
1998 for each Base Rate Loan, (ii) on the last day of the applicable Interest
Period for each Eurodollar Rate Loan and, if such Interest Period extends for
more than three (3) months, at intervals of three (3) months after the first day
of such Interest Period, and (iii) upon payment in full of the principal amount
of such Loan.
2.3. Payment of Principal. The principal amount of each Loan shall be due
and payable to the Agent for the benefit of each Lender in full on the Revolving
Credit Termination Date, or
26
<PAGE>
earlier as specifically provided herein. The principal amount of any Base Rate
Loan may be prepaid in whole or in part at any time. The principal amount of any
Eurodollar Rate Loan may be prepaid only at the end of the applicable Interest
Period unless the Borrower shall pay to the Agent for the account of the Lenders
the additional amount, if any, required under Section 4.5. All prepayments of
Loans made by the Borrower shall be in the amount of $100,000 or such greater
amount which is an integral multiple of $10,000, or the amount equal to all
Revolving Credit Outstandings, or such other amount as necessary to comply with
Section 2.1(b) or Section 2.8.
2.4. Manner of Payment. (a) Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Loans, shall be made to the Agent at
the Principal Office, for the account of each Lender, in Dollars and in
immediately available funds without setoff, deduction or counterclaim before
12:30 P.M. on the date such payment is due. The Agent may, but shall not be
obligated to, debit the amount of any such payment which is not made by such
time to any ordinary deposit account, if any, of the Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the Borrower
hereunder that is not made both in Dollars and in immediately available funds
and prior to 12:30 P.M. to be a non-conforming payment. Any such payment shall
not be deemed to be received by the Agent until the later of (i) the time such
funds become available funds and (ii) the next Business Day. Any non-conforming
payment may constitute or become a Default or Event of Default upon giving of
written notice by the Agent to the Borrower. Interest shall continue to accrue
on any principal as to which a non-conforming payment is made until the later of
(x) the date such funds become available funds or (y) the next Business Day at
the Default Rate from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Notes becomes due
and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day unless provided otherwise under
clause (ii) of the definition of "Interest Period"; provided that interest shall
continue to accrue during the period of any such extension and provided further,
that in no event shall any such due date be extended beyond the Revolving Credit
Termination Date.
2.5. Notes. Loans made by each Lender shall be evidenced by the Note
payable to the order of such Lender in the respective amount of its Applicable
Commitment Percentage of the Revolving Credit Commitment, which Note shall be
dated the Closing Date or a later date pursuant to an Assignment and Acceptance
and shall be duly completed, executed and delivered by the Borrower.
2.6. Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Loans and the fees
described in Section 2.10 shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by the Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or
27
<PAGE>
counterclaim, and (c) the Agent will promptly distribute to the Lenders in
immediately available funds payments received in fully collected, immediately
available funds from the Borrower.
2.7. Reductions. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed
in writing), of such reduction. Each such reduction shall be in the aggregate
amount of $1,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment of the Loans
to the extent that the principal amount of Revolving Credit Outstandings exceeds
the Total Revolving Credit Commitment after giving effect to such reduction,
together with accrued and unpaid interest on the amounts prepaid. No such
reduction shall result in the payment of any Eurodollar Rate Loan other than on
the last day of the Interest Period of such Eurodollar Rate Loan unless such
prepayment is accompanied by amounts due, if any, under Section 4.5.
2.8. Conversions and Elections of Subsequent Interest Periods. Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in Article IV, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on any
Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate Loans
on the last day of the Interest Period for such Eurodollar Rate Loans; and
(b) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 10:30 A.M. three (3)
Business Days' prior to the date of such election or Conversion:
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans to begin on the last day of the then current
Interest Period for such Eurodollar Rate Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate Loans on any
Business Day.
Each election and Conversion pursuant to this Section 2.8 shall be subject
to the limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in Sections 2.1, 2.3 and Article IV. The Agent
shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received. All such Continuations or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.
28
<PAGE>
2.9. Increase and Decrease in Amounts. The amount of the Total Revolving
Credit Commitment which shall be available to the Borrower as Advances shall be
reduced by the aggregate amount of Revolving Credit Outstandings.
2.10. Unused Fee. For the period beginning on the Closing Date and ending
on the Revolving Credit Termination Date, the Borrower agrees to pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an unused fee equal to the Applicable Unused Fee
multiplied by the average daily amount by which the Total Revolving Credit
Commitment exceeds the Revolving Credit Outstandings. Such fees shall be due in
arrears on the last Business Day of each March, June, September and December
commencing June 30, 1998 to and on the Revolving Credit Termination Date.
Notwithstanding the foregoing, so long as any Lender fails to make available any
portion of its Revolving Credit Commitment when requested, such Lender shall not
be entitled to receive payment of its pro rata share of such fee until such
Lender shall make available such portion. Such fee shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed.
2.11. Deficiency Advances. No Lender shall be responsible for any default
of any other Lender in respect to such other Lender's obligation to make any
Loan hereunder nor shall the Revolving Credit Commitment of any Lender hereunder
be increased as a result of such default of any other Lender. Without limiting
the generality of the foregoing, in the event any Lender shall fail to advance
funds to the Borrowers as herein provided, the Agent may in its discretion, but
shall not be obligated to, advance under the applicable Note in its favor as a
Lender all or any portion of such amount or amounts (each, a "deficiency
advance") and shall thereafter be entitled to payments of principal of and
interest on such deficiency advance in the same manner and at the same interest
rate or rates to which such other Lender would have been entitled had it made
such Advance under its Note; provided that, (i) such defaulting Lender shall not
be entitled to receive payments of principal, interest or fees with respect to
such deficiency advance until such deficiency advance shall be paid by such
Lender and (ii) upon payment to the Agent from such other Lender of the entire
outstanding amount of each such deficiency advance, together with accrued and
unpaid interest thereon, from the most recent date or dates interest was paid to
the Agent by the Borrower on each Loan comprising the deficiency advance at the
interest rate per annum for overnight borrowing by the Agent from the Federal
Reserve Bank, then such payment shall be credited against the applicable Note of
the Agent in full payment of such deficiency advance and the Borrower shall be
deemed to have borrowed the amount of such deficiency advance from such other
Lender as of the most recent date or dates, as the case may be, upon which any
payments of interest were made by the Borrower thereon.
2.12. Use of Proceeds. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower for (i)
general working capital needs and other corporate purposes not to exceed, in the
aggregate, $10,000,000, and (ii) the making of Acquisitions permitted hereunder.
2.13. Extension of Stated Termination Date. At the request of the Borrower
the Lenders may, in their sole discretion, elect to extend the Stated
Termination Date then in effect for two additional periods of one year each. The
Borrower shall notify the Lenders of its request for such
29
<PAGE>
an extension by delivering to the Agent and the Lenders notice of such request
signed by an Authorized Representative not more than ninety (90) days nor less
than sixty (60) days prior to the anniversary of the Closing Date next preceding
the Stated Termination Date then in effect. If the Lenders shall elect to so
extend, the Agent shall notify the Borrower in writing within sixty (60) days of
its receipt of such request for extension of the decision of the Lenders as to
whether to extend the Stated Termination Date. Failure by any Lender to respond
to a request for an extension shall constitute a refusal of such Lender to give
its consent to such extension. Failure by the Agent to give such notice shall
constitute refusal by the Lenders to extend the Stated Termination Date.
30
<PAGE>
ARTICLE III
Security
3.1. Security. As security for the full and timely payment and performance
of all Obligations, the Credit Parties shall on or before the Closing Date
deliver to the Agent, in form and substance reasonably acceptable to the Agent,
the Security Instruments, and such duly executed Uniform Commercial Code
financing statements sufficient to grant to the Agent for the benefit of the
Lenders a duly perfected first priority security interest in all Collateral
subject to no prior Lien or other encumbrance or restriction on transfer (other
than restrictions on transfer imposed by applicable securities laws) and Liens
permitted hereunder.
3.2. Stock Pledge. As security for the full and timely payment and
performance of all Obligations now existing or hereafter arising, and certain
Guarantors' obligations under the Facility Guaranty, the Borrower and each
Domestic Subsidiary owning any Pledged Stock or Partnership Interests shall on
or before the Closing Date deliver to the Agent, in form and substance
reasonably acceptable to the Agent, the Stock Pledge Agreement together with
certificates representing such Pledged Stock or Partnership Interests and such
stock powers duly executed in blank as may be required by the Agent in
accordance with the terms hereof and thereof. In addition to any Stock Pledge
Agreement required to be delivered pursuant to Section 7.19 hereof, the Borrower
and each Domestic Subsidiary hereby agrees to pledge to the Agent for the
benefit of the Lenders (i) 100% of the capital stock and related interests and
rights of any Domestic Subsidiary hereafter acquired or created, (ii) 65% of the
Voting Stock and 100% of the non-voting common stock and related interests and
rights of any Direct Foreign Subsidiary hereafter acquired or created and (iii)
100% of the capital stock and related interests and rights of any Foreign
Subsidiary of the Borrower to the extent such action would not result in any
material adverse tax impact on the Borrower and, in each case, to deliver to the
Agent a Stock Pledge Agreement substantially in the form of Exhibit G hereto
within thirty (30) days of the acquisition or creation of such Subsidiary.
3.3. Facility Guaranty. The Borrower shall cause the Facility Guaranty to
be delivered on or before the Closing Date by each Domestic Subsidiary, in form
and substance reasonably acceptable to the Agent. The Borrower hereby agrees to
cause a Facility Guaranty to be delivered by any hereafter acquired, created or
arising (i) Domestic Subsidiary and (ii) Foreign Subsidiary to the extent such
action would not result in any material adverse tax impact on the Borrower.
3.4. Intellectual Property Security Agreement. The Borrower and each
Subsidiary owning any material patents, patent applications, trademarks,
trademark registrations and applications therefor, copyrights, copyright
registrations and applications therefore or any other material intellectual
property, shall deliver to the Agent for the benefit of the Lenders the
Intellectual Property Security Agreements and the Intellectual Property
Assignments. The Borrower hereby agrees to pledge, or cause to be pledged, all
intellectual property interests and licenses hereafter acquired or created and
owned by the Borrower or any Subsidiary within thirty (30) days of the
acquisition or creation of such intellectual property or license.
3.5. Further Assurances. At the request of the Agent, the Borrower will or
will cause its Subsidiaries, as the case may be to execute, by its duly
authorized officers, alone or with the Agent,
31
<PAGE>
any certificate, instrument, statement or document, or to procure any such
certificate, instrument, statement or document, or to take such other action
(and pay all connected reasonable costs) which the Agent reasonably deems
necessary from time to time to create, continue or preserve the liens and
security interests in Collateral (and the perfection and priority thereof) of
the Agent contemplated hereby and by the other Loan Documents.
3.6. Information Regarding Collateral. The Borrower represents, warrants
and covenants that (i) the chief executive office of the Borrower and each other
Person providing Collateral pursuant to a Security Instrument (each, a
"Grantor") at the Closing Date is located at the address or addresses specified
on Schedule 3.6, and (ii) Schedule 3.6 contains a true and complete list of (a)
the name and address of each Grantor and of each other Person that has effected
any merger or consolidation with a Grantor or contributed or transferred to a
Grantor any property constituting Collateral at any time since January 1, 1993
(excluding Persons making sales in the ordinary course of their businesses to a
Grantor of property constituting inventory in the hands of such seller), (b)
each location of the chief executive office of each Grantor at any time since
January 1, 1993, (c) each location in which goods constituting Collateral are or
have been located since January 1, 1993 (together with the name of each owner of
the property located at such address if not the applicable Grantor, and a
summary description of the relationship between the applicable Grantor and such
Person), and (d) each trade style used by any Grantor since January 1, 1993 and
the purposes for which it was used. Borrower shall not change, and shall not
permit any other Grantor to change, the location of its chief executive office
or any location specified in clause (c) of the immediately preceding sentence,
or use or permit any other Grantor to use, any additional trade style, except
upon giving not less than thirty (30) days' prior written notice to the Agent
and taking or causing to be taken all such action at Borrower's or such other
Grantor's expense as may be reasonably requested by the Agent to perfect or
maintain the perfection of the Lien of the Agent in Collateral.
32
<PAGE>
ARTICLE IV
Change in Circumstances
4.1. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law, rule,
or regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office)
to any tax, duty, or other charge with respect to any Eurodollar Rate
Loans, its Note, or its obligation to make Eurodollar Rate Loans, or
change the basis of taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Agreement or its Note in respect of
any Eurodollar Rate Loans (other than taxes imposed on the overall net
income of such Lender by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than the
Reserve Requirement utilized in the determination of the Eurodollar Rate)
relating to any extensions of credit or other assets of, or any deposits
with or other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Revolving Credit Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the London interbank market any other condition affecting
this Agreement or its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Loans or to reduce any sum received or receivable by such Lender
(or its Applicable Lending Office) under this Agreement or its Note with respect
to any Eurodollar Rate Loans, then the Borrower shall pay to such Lender on
demand such amount or amounts as will compensate such Lender for such increased
cost or reduction. If any Lender requests compensation by the Borrower under
this Section 4.1(a), the Borrower may, by notice to such Lender (with a copy to
the Agent), suspend the obligation of such Lender to make or Continue Loans of
the Type with respect to which such compensation is requested, or to Convert
Loans of any other Type into Loans of such Type, until the event or condition
giving rise to such request ceases to be in effect (in which case the provisions
of Section 4.4 shall be applicable); provided that such suspension shall not
affect the right of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the
33
<PAGE>
interpretation or administration thereof by any governmental authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such governmental authority, central bank, or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder to a level below that which
such Lender or such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its policies with
respect to capital adequacy), then from time to time upon demand the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section 4.1 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 4.1 shall furnish to the Borrower and the Agent
a statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
4.2. Limitation on Types of Loans. If on or prior to the first day of any
Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
4.3. Illegality. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Rate Loans hereunder, then such
Lender shall promptly notify the Borrower thereof and such Lender's obligation
to make or Continue Eurodollar Rate Loans and to Convert other Types of Loans
into Eurodollar Rate Loans shall be suspended until such time as such Lender may
again
34
<PAGE>
make, maintain, and fund Eurodollar Rate Loans (in which case the provisions of
Section 4.4 shall be applicable).
4.4. Treatment of Affected Loans. If the obligation of any Lender to make
a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other Type
into, Loans of a particular Type shall be suspended pursuant to Section 4.1 or
4.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 4.3 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 4.1 or 4.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Loans of the Affected Type shall be made or Continued instead as
Base Rate Loans, and all Loans of such Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead into
(or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.
4.5. Compensation. Upon the request of any Lender, the Borrower shall pay
to such Lender such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Rate Loan
for any reason (including, without limitation, the acceleration of the
Loans pursuant to Section 9.1) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article V
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Rate
Loan on the date for such borrowing, Conversion, Continuation, or
prepayment specified in the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Agreement.
35
<PAGE>
4.6. Taxes. (a) Any and all payments by the Borrower to or for the account
of any Lender or the Agent hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable under this Agreement or any other Loan Document
to any Lender or the Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.6) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 11.2, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 4.6) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Lender is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
36
<PAGE>
(e) For any period with respect to which a Lender has failed to provide
the Borrower and the Agent with the appropriate form pursuant to Section 4.6(d)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 4.6(a) or
4.6(b) with respect to Taxes imposed by the United States; provided, however,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 4.6, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 4.6 shall survive for a period of one (1) year after the
termination of the Revolving Credit Commitments and the payment in full of the
Notes.
37
<PAGE>
ARTICLE V
Conditions to Making Loans
5.1. Conditions of Initial Advance. The obligation of the Lenders to make
the initial Advance under the Revolving Credit Facility is subject to the
conditions precedent that:
(a) the Agent shall have received on the Closing Date, in form and
substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement, the Notes,
the initial Facility Guaranties, the Security Instruments, and the
other Loan Documents, together with all schedules and exhibits
thereto;
(ii) the favorable written opinion or opinions with respect to
the Loan Documents and the transactions contemplated thereby of
counsel to the Credit Parties dated the Closing Date, addressed to
the Agent and the Lenders and satisfactory to Smith Helms Mulliss &
Moore, L.L.P., special counsel to the Agent, substantially in the
form of Exhibit H;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee thereof)
of each Credit Party certified by its secretary or assistant
secretary as of the Closing Date, approving and adopting the Loan
Documents to be executed by such Person, and authorizing the
execution and delivery thereof;
(iv) specimen signatures of officers of each of the Credit
Parties executing the Loan Documents on behalf of such Credit Party,
certified by the secretary or assistant secretary of such Credit
Party;
(v) the Organizational Documents of each of the Loan Parties
certified as of a recent date by the Secretary of State of its state
of organization;
(vi) Operating Documents of each of the Loan Parties certified
as of the Closing Date as true and correct by its secretary or
assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation of
each of the Loan Parties as to the due existence and good standing
of such Person;
(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to conduct
business under assumed name, issued in respect of each of the Loan
Parties as of a recent date by the Secretary of State or comparable
official of each jurisdiction in which the failure to be qualified
to do business or authorized so to conduct business could have a
Material Adverse Effect;
38
<PAGE>
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) certificate of an Authorized Representative dated the
Closing Date demonstrating compliance with the financial covenants
contained in Sections 8.1(a) through 8.1(e) as of the Closing Date,
substantially in the form of Exhibit I;
(xi) evidence of all insurance required by the Loan Documents;
(xii) an initial Borrowing Notice, if any, and, if elected by
the Borrower, Interest Rate Selection Notice;
(xiii) Uniform Commercial Code financing statements for filing
in all places required by applicable law to perfect the Liens of the
Agent under the Security Instruments as a first priority Lien as to
items of Collateral in which a security interest may be perfected by
the filing of financing statements, and such other documents and/or
evidence of other actions as may be necessary under applicable law
to perfect the Liens of the Agent under the Security Instruments as
a first priority Lien in and to such other Collateral as the Agent
may require, including without limitation:
(i) the delivery by the Borrower of all stock
certificates evidencing Pledged Stock and certificates, if
any, evidencing ownership of Partnership Interests,
accompanied in each case by duly executed stock powers (or
other appropriate transfer documents) in blank affixed
thereto; and
(ii) the delivery by the Borrower of certificates of the
Registrar of each partnership Subsidiary evidencing the due
registration on the registration books of such partnership of
the Lien in favor of the Agent conferred under the Security
Instruments;
(xiv) evidence that all fees payable by the Borrower on the
Closing Date to the Agent and the Lenders have been paid in full;
(xv) Uniform Commercial Code search results showing only those
Liens as are acceptable to the Lenders;
(xvi) evidence of the successful consummation by the Borrower
of an initial public offering of its common stock yielding gross
cash proceeds of $48,000,000 and at least $3,000,000 in liquid
assets after the payment of all outstanding debt, fees and expenses;
(xvii) a copy of the Registration Statement and all amendments
thereto and evidence that it has been declared effective by the
Securities and Exchange Commission; and
39
<PAGE>
(xviii) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or
prior to the Closing Date in connection with the consummation of the
transactions contemplated hereby; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) there shall not have occurred or become known to the
Agent or the Lenders any event, condition, situation or status since
the date of the information contained in the financial and business
projections, budgets, pro forma data and forecasts concerning the
Borrower and its Subsidiaries delivered to the Agent prior to the
Closing Date that has had or could reasonably be expected to result
in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending or
threatened which could reasonably be likely to result in a Material
Adverse Effect; and
(iii) the Loan Parties shall have received all approvals,
consents and waivers, and shall have made or given all necessary
filings and notices as shall be required to consummate the
transactions contemplated hereby without the occurrence of any
default under, conflict with or violation of (A) any applicable law,
rule, regulation, order or decree of any Governmental Authority or
arbitral authority or (B) any agreement, document or instrument to
which any of the Loan Parties is a party or by which any of them or
their properties is bound, except for such approvals, consents,
waivers, filings and notices the receipt, making or giving of which
will not have a Material Adverse Effect.
5.2. Conditions of Loans. The obligations of the Lenders to make any Loans
hereunder on or subsequent to the Closing Date are subject to the satisfaction
of the following conditions:
(a) the Agent shall have received a Borrowing Notice as required by
Article II;
(b) the representations and warranties of the Loan Parties set forth
in Article VI and in each of the other Loan Documents shall be true and
correct in all material respects on and as of the date of such Advance
with the same effect as though such representations and warranties had
been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in Section 6.6(a)(i)
shall be deemed to be those financial statements most recently delivered
to the Agent and the Lenders pursuant to Section 7.1 from the date
financial statements are delivered to the Agent and the Lenders in
accordance with such Section;
40
<PAGE>
(c) at the time of (and after giving effect to) each Advance, no
Default or Event of Default specified in Article IX shall have occurred
and be continuing; and
(d) immediately after giving effect to a Loan, the aggregate
principal balance of all outstanding Loans for each Lender shall not
exceed such Lender's Revolving Credit Commitment.
41
<PAGE>
ARTICLE VI
Representations and Warranties
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery of
the documents mentioned herein and the making of Loans), that:
6.1. Organization and Authority.
(a) The Borrower and each Subsidiary is a corporation or partnership
duly organized and validly existing under the laws of the jurisdiction of
its formation;
(b) The Borrower and each Subsidiary (x) has the requisite corporate
or partnership power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in the
Loan Documents, and (y) is qualified to do business in every jurisdiction
in which failure so to qualify would have a Material Adverse Effect;
(c) The Borrower has the corporate power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow hereunder,
and to execute, deliver and perform each of the other Loan Documents to
which it is a party;
(d) Each Credit Party (other than the Borrower) has the corporate or
partnership power and authority to execute, deliver and perform the
Facility Guaranty and each of the other Loan Documents to which it is a
party; and
(e) When executed and delivered, each of the Loan Documents to which
any Credit Party is a party will be the legal, valid and binding
obligation or agreement, as the case may be, of such Credit Party,
enforceable against such Credit Party in accordance with its terms,
subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of general
principles of equity (whether considered in a proceeding at law or in
equity);
6.2. Loan Documents. The execution, delivery and performance by each
Credit Party of each of the Loan Documents to which it is a party:
(a) have been duly authorized by all requisite Organizational Action
of such Credit Party required for the lawful execution, delivery and
performance thereof;
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority binding
on such Credit Party or its properties, or (iii) the Organizational
Documents or Operating Documents of such Credit Party;
42
<PAGE>
(c) does not and will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with notice or lapse
of time or both, would constitute an event of default, under any contract,
indenture, agreement or other instrument or document to which such Credit
Party is a party, or by which the properties or assets of such Credit
Party are bound; and
(d) does not and will not result in the creation or imposition of
any Lien upon any of the properties or assets of such Credit Party or any
Subsidiary except any Liens in favor of the Agent and the Lenders created
by the Security Instruments;
6.3. Solvency. Each Credit Party is Solvent after giving effect to the
transactions contemplated by the Loan Documents; provided that, with respect to
each Guarantor, such Guarantor's obligations under the Facility Guaranty are
limited to an aggregate amount equal to the largest amount that would not render
its obligations under the Facility Guaranty subject to avoidance under Section
548 of the United States Bankruptcy Code or any comparable provisions of any
applicable state law;
6.4. Subsidiaries and Stockholders. The Borrower has no Subsidiaries other
than those Persons listed as Subsidiaries in Schedule 6.4 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 7.19; Schedule 6.4 states as of the date hereof the organizational form
of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by any
such Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
non assessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in Schedule
6.4, free and clear of any Lien;
6.5. Ownership Interests. Borrower owns no interest in any Person other
than the Persons listed in Schedule 6.4, equity investments in Persons not
constituting Subsidiaries permitted under Section 8.6 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 7.19;
6.6. Financial Condition.
(a) The Borrower has heretofore furnished to each Lender an audited
consolidated and related consolidating balance sheet of the Borrower and
its Subsidiaries as at December 31, 1996 and the notes thereto and the
related consolidated statements of income, stockholders' equity and cash
flows for the Fiscal Year then ended as examined and certified by Price
Waterhouse LLP, and unaudited consolidated and consolidating interim
financial statements of the Borrower and its Subsidiaries consisting of a
consolidated and consolidating balance sheets and related consolidated and
consolidating statements of income, stockholders' equity and cash flows,
in each case without notes, for and as of the end of the nine month period
ending September 30, 1997.
43
<PAGE>
Except as set forth therein, such financial statements (including the
notes thereto) present fairly the financial condition of the Borrower and
its Subsidiaries as of the end of such Fiscal Year and nine month period
and results of their operations and the changes in its stockholders'
equity for the Fiscal Year and interim period then ended, all in
conformity with GAAP applied on a Consistent Basis, subject however, in
the case of unaudited interim statements to year end audit adjustments;
(b) since the later of (i) the date of the audited financial
statements delivered pursuant to Section 6.6(a) hereof or (ii) the date of
the audited financial statements most recently delivered pursuant to
Section 7.1(a) hereof, there has been no material adverse, change in the
condition, financial or otherwise, of the Borrower or any of its
Subsidiaries, taken as a whole, or in the businesses, properties,
performance, prospects or operations of the Borrower or its Subsidiaries,
taken as a whole, nor have such businesses or properties been materially
adversely affected as a result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo or act
of God; and
(c) except as set forth in the financial statements referred to in
Section 6.6(a) or in Schedule 6.6 or permitted by Section 8.4, neither
Borrower nor any Subsidiary has incurred, other than in the ordinary
course of business, any material Indebtedness, Contingent Obligation or
other commitment or liability which remains outstanding or unsatisfied;
6.7. Title to Properties. The Borrower and each of its Subsidiaries and
each other Credit Party has good and marketable title to all its real and
personal properties, subject to no transfer restrictions or Liens of any kind,
except for the transfer restrictions and Liens described in Schedule 6.7 and
Liens permitted by Section 8.3;
6.8. Taxes. Except as set forth in Schedule 6.8, the Borrower and each of
its Subsidiaries has filed or caused to be filed all federal, state and local
tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in Section 6.6(a) and satisfactory to the Borrower's independent
certified public accountants have been established, have paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it, to
the extent that such taxes have become due;
6.9. Other Agreements. No Credit Party nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree, agreement,
lease or instrument, or subject to other restrictions, which individually
or in the aggregate could reasonably be expected to have a Material
Adverse Effect; or
(b) in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument to which such Credit Party or any Subsidiary is a party, which
default has, or if not remedied
44
<PAGE>
within any applicable grace period could reasonably be likely to have, a
Material Adverse Effect;
6.10. Litigation. Except as set forth in Schedule 6.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or other Credit Party or affecting the Borrower or any Subsidiary or
other Credit Party or any properties or rights of the Borrower or any Subsidiary
or other Credit Party, which could reasonably be likely to have a Material
Adverse Effect;
6.11. Margin Stock. The proceeds of the borrowings made hereunder will be
used by the Borrower only for the purposes expressly authorized herein. None of
such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof;
6.12. Investment Company. No Credit Party is an "investment company," or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. ss. 80a-1, et seq.). The application of the proceeds
of the Loans and repayment thereof by the Borrower and the performance by the
Borrower and the other Loan Parties of the transactions contemplated by the Loan
Documents will not violate any provision of said Act, or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder, in each case
as in effect on the date hereof;
6.13. Patents, Etc. The Borrower and each other Credit Party owns or has
the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict with any patent, license, franchise, trademark, trade
secret, trade name, copyright, other proprietary right of any other Person;
6.14. No Untrue Statement. Neither (a) this Agreement nor any other Loan
Document or the Registration Statement or certificate or document executed and
delivered by or on behalf of the Borrower or any other Credit Party in
accordance with or pursuant to any Loan Document nor (b) any statement,
representation, or warranty provided to the Agent in connection with the
negotiation or preparation of the Loan Documents contains any misrepresentation
or untrue statement of material fact or omits to state a material fact
necessary, in light of the circumstance under which it was made, in order to
make any such warranty, representation or statement contained therein not
misleading;
45
<PAGE>
6.15. No Consents, Etc. Neither the respective businesses or properties of
the Loan Parties or any Subsidiary, nor any relationship among the Loan Parties
or any Subsidiary and any other Person, nor any circumstance in connection with
the execution, delivery and performance of the Loan Documents and the
transactions contemplated thereby, is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of any Credit Party as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by the Loan Documents, which, if not obtained or
effected, would be reasonably likely to have a Material Adverse Effect, or if
so, such consent, approval, authorization, filing, registration or qualification
has been duly obtained or effected, as the case may be;
6.16. Employee Benefit Plans.
(a) The Borrower and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit Laws
with respect to all Employee Benefit Plans except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under Section
501(a) of the Code. No material liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged in
a nonexempt prohibited transaction described in Section 4975 of the Code
or Section 406 of ERISA affecting any of the Employee Benefit Plans or the
trusts created thereunder which could subject any such Employee Benefit
Plan or trust to a material tax or penalty on prohibited transactions
imposed under Internal Revenue Code Section 4975 or ERISA, (ii) incurred
any accumulated funding deficiency with respect to any Employee Benefit
Plan, whether or not waived, or any other liability to the PBGC which
remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid, (iii) failed to make a required
contribution or payment to a Multiemployer Plan, or (iv) failed to make a
required installment or other required payment under Section 412 of the
Code, Section 302 of ERISA or the terms of such Employee Benefit Plan to
an Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan or Multiemployer Plan, and neither
the Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal
liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under each
Employee Benefit Plan which is subject to Title IV of ERISA, did not, as
of the most recent
46
<PAGE>
valuation date for each such plan, exceed the then current value of the
assets of such Employee Benefit Plan allocable to such benefits;
(e) To the best of the Borrower's knowledge, each Employee Benefit
Plan subject to Title IV of ERISA, maintained by the Borrower or any ERISA
Affiliate, has been administered in accordance with its terms in all
material respects and is in compliance in all material respects with all
applicable requirements of ERISA and other applicable laws, regulations
and rules;
(f) The consummation of the Loans and the issuance of the Letters of
Credit provided for herein will not involve any prohibited transaction
under ERISA which is not subject to a statutory or administrative
exemption; and
(g) No material proceeding, claim, lawsuit and/or investigation
exists or, to the best knowledge of the Borrower after due inquiry, is
threatened concerning or involving any Employee Benefit Plan;
6.17. No Default. As of the date hereof, there does not exist any Default
or Event of Default hereunder;
6.18. Environmental Laws. Except as listed on Schedule 6.18, the Borrower
and each Subsidiary is in compliance with all applicable Environmental Laws,
except where any noncompliance would not reasonably be expected to have a
Material Adverse Effect, and has been issued and currently maintains all
required material federal, state and local permits, licenses, certificates and
approvals. Except as listed on Schedule 6.18, neither the Borrower nor any
Subsidiary has been notified in writing of any pending or threatened action,
suit, proceeding or investigation, and neither the Borrower nor any Subsidiary
is aware of any facts, which (a) calls into question, or could reasonably be
expected to call into question, compliance by the Borrower or any Subsidiary
with any Environmental Laws in writing, except where any noncompliance would not
reasonably be expected to have a Material Adverse Effect, (b) seeks, or could
reasonably be expected to form the basis of a meritorious proceeding, to
suspend, revoke or terminate any license, permit or approval necessary for the
operation of the Borrower's or any Subsidiary's business or facilities or for
the generation, handling, storage, treatment or disposal of any Hazardous
Materials, except where any such suspension, revocation or termination would not
reasonably be expected to have a Material Adverse Effect, or (c) seeks to cause,
or could reasonably be expected to form the basis of a meritorious proceeding to
cause, any property of the Borrower or any Subsidiary or other Credit Party to
be subject to any restrictions on ownership, use, occupancy or transferability
under any Environmental Law, except where such restriction would not reasonably
be expected to have a Material Adverse Effect;
6.19. Employment Matters. (a) None of the employees of the Borrower or any
Subsidiary is subject to any collective bargaining agreement and there are no
strikes, work stoppages, election or decertification petitions or proceedings,
unfair labor charges, equal opportunity proceedings, or other material
labor/employee related controversies or proceedings pending or, to the best
knowledge of the Borrower, threatened against the Borrower or any
47
<PAGE>
Subsidiary or between the Borrower or any Subsidiary and any of its employees,
other than employee grievances arising in the ordinary course of business which
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not have a
Material Adverse Effect, the Borrower and each Subsidiary is in compliance in
all respects with all applicable laws, rules and regulations pertaining to labor
or employment matters, including without limitation those pertaining to wages,
hours, occupational safety and taxation and there is neither pending or
threatened any litigation, administrative proceeding nor, to the knowledge of
the Borrower, any investigation, in respect of such matters which, if decided
adversely, could reasonably be likely, individually or in the aggregate, to have
a Material Adverse Effect; and
6.20. RICO. Neither the Borrower nor any Subsidiary is engaged in or has
engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or other
similar laws.
6.21. Perfected Security Instruments. (a) At all times after execution and
delivery of each Pledge Agreement by the Pledgor thereunder and satisfaction of
the conditions set forth in Section 5.1, the security interests created in favor
of the Agent for the benefit of the Lenders under the Pledge Agreements will
constitute valid, perfected security interests in the Pledged Stock and
Partnership Interests, subject to no other Liens;
(b) At all times after execution and delivery of each Security
Instrument (other than the Pledge Agreements) by the parties thereto and
completion of the filings and recordings listed on Schedule 6.21 hereto, the
security interests created in favor of the Agent for the benefit of the Lenders
under the Security Instruments (other than the Pledge Agreements) will
constitute valid perfected security interests in the Collateral described
therein, subject to no other Liens whatsoever except for Liens permitted under
Section 8.3.
48
<PAGE>
ARTICLE VII
Affirmative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Subsidiary to:
7.1. Financial Reports, Etc. (a) As soon as practical and in any event
within 120 days after the end of each Fiscal Year of the Borrower, deliver or
cause to be delivered to the Agent and each Lender (i) consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as at the end
of such Fiscal Year, and the notes thereto, and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows, and the
respective notes thereto (in the case of consolidated statements only), for such
Fiscal Year, setting forth (other than for consolidating statements) comparative
financial statements for the preceding Fiscal Year, all prepared in accordance
with GAAP applied on a Consistent Basis and containing, with respect to the
consolidated financial statements, opinions of Price Waterhouse LLP, or other
such independent certified public accountants selected by the Borrower and
approved by the Agent which approval shall not be unreasonably withheld (unless
such accountants shall be one of the six (6) largest accounting firms in the
United States, in which case the Agent's approval shall not be required), which
are unqualified as to the scope of the audit performed and as to the "going
concern" status of the Borrower and without any exception not acceptable to the
Lenders, and (ii) a certificate of an Authorized Representative demonstrating
compliance with Sections 8.1(a) through 8.1(e), which certificate shall be in
the form of Exhibit I;
(b) as soon as practical and in any event within 45 days after the end of
each fiscal quarter (except the last fiscal quarter of the Fiscal Year), deliver
to the Agent and each Lender (i) consolidated and consolidating balance sheets
of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and
the related consolidated and consolidating statements of income, stockholders'
equity and cash flows for such fiscal quarter and for the period from the
beginning of the then current Fiscal Year through the end of such reporting
period, and accompanied by a certificate of an Authorized Representative to the
effect that such financial statements present fairly the financial position of
the Borrower and its Subsidiaries as of the end of such fiscal period and the
results of their operations and the changes in their financial position for such
fiscal period, in conformity with the standards set forth in Section 6.6(a) with
respect to interim financial statements, and (ii) a certificate of an Authorized
Representative containing computations for such quarter comparable to that
required pursuant to Section 7.1(a)(ii);
(c) together with each delivery of the financial statements required by
Section 7.1(a)(i), deliver to the Agent and each Lender a letter from the
Borrower's accountants specified in Section 7.1(a)(i) stating that in performing
the audit necessary to render an opinion on the financial statements delivered
under Section 7.1(a)(i), they obtained no knowledge of any Default or Event of
Default by the Borrower in the fulfillment of the terms and provisions of this
Agreement insofar as they relate to financial matters (which at the date of such
statement remains uncured); or if the accountants have obtained knowledge of
such Default or Event of Default, a statement specifying the nature and period
of existence thereof;
49
<PAGE>
(d) promptly upon their becoming available to the Borrower, the Borrower
shall deliver to the Agent and each Lender a copy of (i) all regular or special
reports or effective registration statements which Borrower or any Subsidiary
shall file with the Securities and Exchange Commission (or any successor
thereto) or any securities exchange, (ii) any proxy statement distributed by the
Borrower or any Subsidiary to its shareholders, bondholders or the financial
community in general, and (iii) any management letter or, upon reasonable
request of the Agent, any other report submitted to the Borrower or any
Subsidiary by independent accountants in connection with any annual, interim or
special audit of the Borrower or any Subsidiary; and
(e) not later than 45 days after the last Business Day of each Fiscal
Year, deliver to the Agent and each Lender a capital and operating expense
budget and consolidated financial projections for the Borrower and its
Subsidiaries for the next Fiscal Year, prepared in accordance with GAAP applied
on a Consistent Basis;
(f) as soon as practicable and in any event within 45 days following the
end of each calendar month, deliver to the Agent and each Lender an accounts
receivable aging report in form and detail acceptable to the Agent;
(g) promptly, from time to time, deliver or cause to be delivered to the
Agent and each Lender such other information regarding Borrower's and any
Subsidiary's operations, business affairs and financial condition as the Agent
or such Lender may reasonably request;
The Agent and the Lenders are hereby authorized to deliver a copy of any
such financial or other information delivered hereunder to the Lenders (or any
affiliate of any Lender) or to the Agent, to any Governmental Authority having
jurisdiction over the Agent or any of the Lenders pursuant to any written
request therefor or in the ordinary course of examination of loan files, or to
any other Person who shall acquire or consider the assignment of, or acquisition
of any participation interest in, any Obligation permitted by this Agreement;
7.2. Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens
(except for Liens permitted under Section 8.3) all trademarks, trade names,
patents, copyrights, trade secrets, know-how, and other intellectual property
and proprietary information (or adequate licenses thereto), in each case as are
reasonably necessary to conduct its business as currently conducted or as
contemplated hereby, all in accordance with customary and prudent business
practices;
7.3. Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 8.7, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary except where the failure to so qualify would not have
a Material Adverse Effect;
50
<PAGE>
7.4. Regulations and Taxes. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes enforceable against its creditors;
7.5. Insurance. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly situated
and otherwise as required by the Security Instruments, (b) maintain general
public liability insurance at all times with responsible insurance carriers
against liability on account of damage to persons and property and (c) maintain
insurance under all applicable workers' compensation laws (or in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes) such policies of insurance to have such limits,
deductibles, exclusions, co-insurance and other provisions providing no less
coverages than are maintained by similar businesses that are similarly situated,
such insurance policies to be in form reasonably satisfactory to the Agent. Each
of the policies of insurance described in this Section 7.5 shall provide that
the insurer shall give the Agent not less than thirty (30) days' prior written
notice before any such policy shall be terminated, lapse or be altered in any
adverse manner;
7.6. True Books. Keep true books of record and account in which full, true
and correct entries will be made of all of its dealings and transactions, and
set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements;
7.7. Right of Inspection. Permit any Person designated by any Lender or
the Agent to visit and inspect any of the properties, corporate books and
financial reports of the Borrower or any Subsidiary and to discuss its affairs,
finances and accounts with its principal officers and independent certified
public accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice;
7.8. Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business, except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect;
7.9. Governmental Licenses. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect;
51
<PAGE>
7.10. Covenants Extending to Other Persons. Cause each of its Subsidiaries
to do with respect to itself, its business and its assets, each of the things
required of the Borrower in Sections 7.2 through 7.9, and 7.18 inclusive;
7.11. Officer's Knowledge of Default. Upon any officer of the Borrower
obtaining knowledge of any Default or Event of Default hereunder or under any
other obligation of the Borrower or any Subsidiary or other Credit Party to any
Lender, [or any event, development or occurrence which could reasonably be
expected to have a Material Adverse Effect,] cause such officer or an Authorized
Representative to promptly notify the Agent of the nature thereof, the period of
existence thereof, and what action the Borrower or such Subsidiary or other
Credit Party proposes to take with respect thereto;
7.12. Suits or Other Proceedings. Upon any officer of the Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any Subsidiary or other Credit Party, or any attachment,
levy, execution or other process being instituted against any assets of the
Borrower or any Subsidiary or other Credit Party, making a claim or claims in an
aggregate amount greater than $500,000 not otherwise covered by insurance,
promptly deliver to the Agent written notice thereof stating the nature and
status of such litigation, dispute, proceeding, levy, execution or other
process;
7.13. Notice of Environmental Complaint or Condition. Promptly provide to
the Agent true, accurate and complete copies of any and all notices, complaints,
orders, directives, claims or citations received by the Borrower or any
Subsidiary relating to any (a) material violation or alleged violation by the
Borrower or any Subsidiary of any applicable Environmental Law; (b) material
release or threatened release by the Borrower or any Subsidiary, or by any
Person handling, transporting or disposing of any Hazardous Material on behalf
of the Borrower or any Subsidiary, or at any facility or property owned or
leased or operated by the Borrower or any Subsidiary, of any Hazardous Material,
except where occurring legally pursuant to a permit or license or in compliance
with Environmental Laws; or (c) material liability or alleged liability of the
Borrower or any Subsidiary for the costs of cleaning up, removing, remediating
or responding to a release of Hazardous Materials;
7.14. Environmental Compliance. If the Borrower or any Subsidiary shall
receive any letter, notice, complaint, order, directive, claim or citation
alleging that the Borrower or any Subsidiary has violated any Environmental Law,
has released any Hazardous Material, or is liable for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials, the
Borrower and any Subsidiary shall, within the time period permitted and to the
extent required by the applicable Environmental Law or the Governmental
Authority responsible for enforcing such Environmental Law, remove or remedy, or
cause the applicable Subsidiary to remove or remedy, such violation or release
or satisfy such liability.
7.15. Indemnification. Without limiting the generality of Section 11.9,
each Credit Party hereby agrees jointly and severally to indemnify and hold the
Agent and the Lenders, and their respective officers, directors, employees and
agents, harmless from and against any and all claims, losses, penalties,
liabilities, damages and expenses (including assessment and cleanup costs and
reasonable attorneys', consultants' or other expert fees, expenses and
disbursements)
52
<PAGE>
arising directly or indirectly from, out of or by reason of (a) the violation of
any Environmental Law by the Borrower or any Subsidiary or with respect to any
property owned, operated or leased by the Borrower or any Subsidiary or (b) the
handling, storage, transportation, treatment, emission, release, discharge or
disposal of any Hazardous Materials by or on behalf of the Borrower or any
Subsidiary, or on or with respect to property owned or leased or operated by the
Borrower or any Subsidiar, except, in each case, where arising out of any
actions or inactions by the Agent or any of the Lenders. The provisions of this
Section 7.15 shall survive repayment of the Obligations and expiration or
termination of this Agreement;
7.16. Further Assurances. At the Borrower's cost and expense, upon request
of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Documents;
7.17. Employee Benefit Plans.
(a) With reasonable promptness, and in any event within thirty (30)
days thereof, give notice to the Agent of (a) the establishment of any new
Pension Plan (which notice shall include a copy of such plan), (b) the
commencement of contributions other than employee elective deferrals under
Section 401(k) of the Code to any Employee Benefit Plan to which the
Borrower or any of its ERISA Affiliates was not previously contributing,
(c) any material increase in the benefits of any existing Employee Benefit
Plan other than with respect to employee elective deferrals covered by
Section 401(k) of the Code, (d) each funding waiver request filed with
respect to any Employee Benefit Plan and all communications received or
sent by the Borrower or any ERISA Affiliate with respect to such request
and (e) the failure of the Borrower or any ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA or Section 412
of the Code by the due date;
(b) Promptly and in any event within fifteen (15) days of becoming
aware of the occurrence or forthcoming occurrence of any (a) Termination
Event or (b) nonexempt "prohibited transaction," as such term is defined
in Section 406 of ERISA or Section 4975 of the Code, in connection with
any Pension Plan or any trust created thereunder, deliver to the Agent a
notice specifying the nature thereof, what action the Borrower or any
ERISA Affiliate has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto;
and
(c) With reasonable promptness but in any event within fifteen (15)
days for purposes of clauses (a), (b) and (c), deliver to the Agent copies
of (a) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under
Section 401(a) of the Code, (b) all notices received by the Borrower or
any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or
to have a trustee appointed to administer any Pension Plan, (c) each
Schedule B
53
<PAGE>
(Actuarial Information) to the annual report (Form 5500 Series) filed by
the Borrower or any ERISA Affiliate with the Internal Revenue Service with
respect to each Pension Plan and (d) all notices received by the Borrower
or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to Section 4202 of
ERISA. The Borrower will notify the Agent in writing within five (5)
Business Days of the Borrower or any ERISA Affiliate obtaining knowledge
or reason to know that the Borrower or any ERISA Affiliate has filed or
intends to file a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of ERISA;
7.18. Continued Operations. Continue at all times to conduct its business
and engage principally in the same line or lines of business substantially as
heretofore conducted;
7.19. New Subsidiaries. Within thirty (30) days of the acquisition or
creation of any Subsidiary cause to be delivered to the Agent for the benefit of
the Lenders each of the following:
(a) a Facility Guaranty executed by such Subsidiary substantially in
the form of Exhibit J;
(b) a Security Agreement of such Subsidiary substantially in the
form of Exhibit K, together with such Uniform Commercial Code financing
statements on Form UCC-1 or otherwise duly executed by such Subsidiary as
"Debtor" and naming the Agent for the benefit of the Lenders as "Secured
Party", in form, substance and number sufficient in the reasonable opinion
of the Agent and its special counsel to be filed in all Uniform Commercial
Code filing offices in all jurisdictions in which filing is necessary or
advisable to perfect in favor of the Agent for the benefit of the Lenders
the Lien on Collateral conferred under such Security Instrument to the
extent such Lien may be perfected by Uniform Commercial Code filing;
(c) if such Subsidiary is a corporation or is a partnership that has
issued certificates evidencing ownership of Partnership Interests, (A) the
Pledged Stock or, if applicable, certificates of ownership of such
Partnership Interests, together with duly executed stock powers or powers
of assignment in blank affixed thereto, and (B) if such Collateral shall
be owned by a Subsidiary who has not then executed and delivered to the
Agent a Security Instrument from the owner of such Collateral granting a
Lien to the Agent in such Collateral, a Security Agreement or a Pledge
Agreement (as appropriate) substantially similar in form and content to
that executed and delivered by the Borrower as of the Closing Date, with
appropriate revisions as to the identity of the pledgor and securing the
obligations of such pledgor under its Facility Guaranty;
(d) if such Subsidiary is a partnership not described in clause (c)
immediately above, (A) the certificate of the Registrar of such
partnership with respect to the registration of the Lien on Partnership
Interests, which certificate shall be in the form of Exhibit B of the
Pledge Agreement, and (B) if such Collateral shall be owned by a
Subsidiary who has not then executed and delivered to the Agent a Security
Instrument
54
<PAGE>
from the owner of such Collateral granting a Lien to the Agent in such
Collateral, a Pledge Agreement substantially similar in form and content
to that executed and delivered by the Borrower as of the Closing Date,
with appropriate revisions as to the identity of the pledgor and securing
the obligations of such pledgor under its Facility Guaranty;
(e) a supplement to the appropriate schedule attached to the
appropriate Security Instruments listing the additional Collateral,
certified as true, correct and complete by the Authorized Representative
(provided that the failure to deliver such supplement shall not impair the
rights conferred under the Security Instruments in after acquired
Collateral);
(f) an opinion of counsel to the Subsidiary dated as of the date of
delivery of the Facility Guaranty and other Loan Documents provided for in
this Section 7.19 and addressed to the Agent and the Lenders, in form and
substance reasonably acceptable to the Agent (which opinion may include
assumptions and qualifications of similar effect to those contained in the
opinions of counsel delivered pursuant to Section 5.1(a)), to the effect
that:
(A) such Subsidiary is duly organized, validly existing and in
good standing in the jurisdiction of its formation, has the
requisite power and authority to own its properties and conduct its
business as then owned and then conducted and proposed to be
conducted, and is duly qualified to transact business and is in good
standing as a foreign corporation or partnership in each other
jurisdiction in which the character of the properties owned or
leased, or the business carried on by it, requires such
qualification and the failure to be so qualified would reasonably be
likely to result in a Material Adverse Effect;
(B) the execution, delivery and performance of the Facility
Guaranty and other Loan Documents described in this Section 7.19 to
which such Subsidiary is a signatory have been duly authorized by
all requisite corporate or partnership action (including any
required shareholder or partner approval), each of such agreements
has been duly executed and delivered and constitutes the valid and
binding agreement of such Subsidiary, enforceable against such
Subsidiary in accordance with its terms, subject to the effect of
any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors' rights
generally and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity); and
(C) the Uniform Commercial Code financing statements on Form
UCC-1 delivered to the Agent by the Subsidiary in connection with
the delivery of the Security Instruments of such Subsidiary have
been duly executed by the Subsidiary and are in form, substance and
number sufficient for filing in all Uniform Commercial Code filing
offices in all jurisdictions in which filing is necessary to perfect
in favor of the Agent for the benefit of the Lenders the Lien
55
<PAGE>
on Collateral conferred under such Security Instruments to the
extent such Lien may be perfected by Uniform Commercial Code filing;
(g) current copies of the charter documents, including partnership
agreements and certificate of limited partnership, if applicable, and
bylaws of such Subsidiary, minutes of duly called and conducted meetings
(or duly effected consent actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by such charter
documents, bylaws or by applicable law, of the shareholders) of such
Subsidiary authorizing the actions and the execution and delivery of
documents described in this Section 7.19.
7.20. Business Credit Diagnostic Examination. Do all things reasonably
necessary to permit the Agent's business credit division to perform a business
credit diagnostic examination of the books, records and systems of the Borrower
and its Subsidiaries within 90 days of the Closing Date, which such examination
will be at the expense of the Agent. The Borrower and its Subsidiaries shall
cooperate fully with such examination, and Borrower shall provide such
schedules, reports and information as the Agent's business credit division may
reasonably request.
56
<PAGE>
ARTICLE VIII
Negative Covenants
Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, the Borrower will not, nor
will it permit any Subsidiary to:
8.1. Financial Covenants.
(a) Consolidated Net Worth. Permit Consolidated Net Worth to be less than
(i) $39,000,000 at the Closing Date and (ii) as at the last day of each
succeeding fiscal quarter of the Borrower and until (but excluding) the last day
of the next following fiscal quarter of the Borrower, the sum of (A) the amount
of Consolidated Net Worth required to be maintained pursuant to this Section
8.1(a) as at the end of the immediately preceding fiscal quarter, plus (B) 75%
of Consolidated Net Income (with no reduction for net losses during any period)
for the fiscal quarter of the Borrower ending on such day (including within
"Consolidated Net Income" certain items otherwise excluded, as provided for in
the definition of "Consolidated Net Income"), plus (C) 100% of the aggregate
amount of all increases in the stated capital and additional paid-in capital
accounts of the Borrower resulting from the issuance of equity securities or
other capital investments.
(b) Consolidated Adjusted Leverage Ratio. Permit the Consolidated Adjusted
Leverage Ratio as of the last day of any fiscal quarter of the Borrower to be
greater than 3.50 to 1.00.
(c) Consolidated Fixed Charge Ratio. Permit the Consolidated Fixed Charge
Ratio as of the last day of any fiscal quarter of the Borrower to be less than
1.25 to 1.00.
(d) Consolidated Senior Funded Debt to Adjusted EBITDA Ratio. Permit the
Consolidated Senior Funded Debt to Adjusted EBITDA Ratio as of the last day of
any fiscal quarter of the Borrower to be greater than 3.00 to 1.00.
(e) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio as of the end of any Four-Quarter Period to be less than 3.00 to
1.00.
8.2. Acquisitions. Enter into any agreement, contract, binding commitment
or other arrangement providing for any Acquisition, or take any action to
solicit the tender of securities or proxies in respect thereof in order to
effect any Acquisition, unless (i) the Person to be (or whose assets are to be)
acquired does not oppose such Acquisition and the line or lines of business of
the Person to be acquired are substantially the same as one or more line or
lines of business conducted by the Borrower and its Subsidiaries, (ii) no
Default or Event of Default shall have occurred and be continuing either
immediately prior to or immediately after giving effect to such Acquisition and
the Borrower shall have furnished to the Agent (A) both (i) two years of
financial statements on the Person being acquired, the most recent year of which
shall be audited, or, if in the case of an Acquisition of assets in which the
Cost of Acquisition is less than
57
<PAGE>
$5,000,000.00 where no audited financial statements are available as to the
operation of the assets being acquired (an "Exception Acquisition"), then such
financial information as is available, but only to the extent that the purchase
agreement for such Acquisition contains terms and conditions with respect to
post-closing purchase price adjustments reasonably acceptable to the Agent, and
(ii) pro forma historical financial statements as of the end of the most
recently completed Fiscal Year of the Borrower and most recent interim fiscal
quarter, if applicable giving effect to such Acquisition and (B) a certificate
in the form of Exhibit I prepared on a historical pro forma basis giving effect
to such Acquisition, which certificate shall demonstrate that no Default or
Event of Default would exist immediately after giving effect thereto, (iii) the
Person acquired shall be a wholly-owned Subsidiary, or be merged into the
Borrower or a wholly-owned Subsidiary, immediately upon consummation of the
Acquisition (or if assets are being acquired, the acquiror shall be the Borrower
or a wholly-owned Subsidiary), (iv) if the Cost of Acquisition shall exceed
$10,000,000, the Required Lenders shall consent to such Acquisition in their
discretion, (v) if, after giving effect to such Acquisition, the aggregate Costs
of Acquisition incurred by Borrower and its Subsidiaries from and after the
Closing Date shall exceed $25,000,000, the Required Lenders shall consent to
such Acquisition in their discretion, and (vi) if the Person acquired shall be
organized under the laws of a jurisdiction other than the United States of
America, the Required Lenders shall consent to such Acquisition in their
discretion; provided, however, that in the case of an Exception Acquisition, so
long as NationsBank shall be the only Lender, NationsBank shall use its best
efforts to advise the Borrower whether or not it has consented to such Exception
Acquisition within three Business Days of its receipt of the available financial
information and purchase agreement.
8.3. Liens. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by the Borrower or any Subsidiary, other than
(a) Liens created under the Security Instruments in favor of the
Agent and the Lenders, and otherwise existing as of the date hereof and as
set forth in Schedule 6.7;
(b) Liens imposed by law for taxes, assessments or charges of any
Governmental Authority for claims not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted, which,
except as expressly so specified on Schedule 6.7, are inferior in respect
of the Collateral to the Liens conferred under the Security Instruments,
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP and which Liens
are not yet enforceable against other creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than 90
days from the date of creation thereof for amounts not yet due or which
are being contested in good faith by appropriate proceedings diligently
conducted, which, except as expressly so specified on Schedule 6.7, are
inferior in respect of the Collateral to the Liens conferred under the
Security Instruments, and with respect to which adequate reserves or other
appropriate provisions
58
<PAGE>
are being maintained in accordance with GAAP and which Liens are not yet
enforceable against other creditors;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other
types of social security benefits or to secure the performance of tenders,
bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result
of progress payments under government contracts;
(e) easements (including reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere materially
with the ordinary conduct of the business of the Borrower or any
Subsidiary and which do not materially detract from the value of the
property to which they attach or materially impair the use thereof to the
Borrower or any Subsidiary;
(f) purchase money Liens to secure Indebtedness permitted under
Section 8.4(f) and incurred to purchase fixed assets, provided such
Indebtedness represents not less than 75% of the purchase price of such
assets as of the date of purchase thereof and no property other than the
assets so purchased secures such Indebtedness; provided, however, that
Borrower may assume Indebtedness in connection with an Acquisition where
the amount of the Indebtedness represents less than 75% of the purchase
price so long as the amount of the Indebtedness with respect to any asset
does not exceed $25,000;
(g) Liens arising in connection with Capital Leases permitted under
Section 8.4(f); provided that no such Lien shall extend to any Collateral
or to any other property other than the assets subject to such Capital
Leases; and
(h) Liens securing Subordinated Indebtedness permitted under Section
8.4(f) payable to a Person which Indebtedness represents a portion of the
Cost of Acquisition of such Person or assets of such Person.
8.4. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of the Borrower, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth in
Schedule 6.6; provided, none of the instruments and agreements evidencing
or governing such Indebtedness shall be amended, modified or supplemented
after the Closing Date to change any terms of subordination, repayment or
rights of conversion, put, exchange or other rights from such terms and
rights as in effect on the Closing Date;
(b) Indebtedness owing to the Agent or any Lender in connection with
this Agreement, any Note or other Loan Document;
59
<PAGE>
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) Indebtedness arising from Rate Hedging Obligations permitted
under Section 8.14;
(e) unsecured intercompany Indebtedness for loans and advances made
by the Borrower or any Guarantor to the Borrower or any Guarantor,
provided that such intercompany Indebtedness is evidenced by a promissory
note or similar written instrument acceptable to the Agent which provides
that such Indebtedness is subordinated to obligations, liabilities and
undertakings of the holder or owner thereof under the Loan Documents on
terms acceptable to the Agent;
(f) additional Indebtedness for Money Borrowed, including
Subordinated Indebtedness, not otherwise covered by clauses (a) through
(e) above, provided that the aggregate outstanding principal amount of all
such other Indebtedness permitted under this clause (f) shall in no event
exceed $10,000,000 at any time and the aggregate outstanding principal
amount of Subordinated Indebtedness permitted under this clause (f) shall
in no event exceed $7,000,000; provided, however, Indebtedness arising out
of earnout agreements and Indebtedness representing a portion of the
purchase price of an Acquisition shall in any event be Subordinated
Indebtedness containing provisions similar to those in Exhibit M, in the
case of earnout agreements, and Exhibit L in the case of other
Indebtedness.
8.5. Transfer of Assets. Sell, lease, transfer or otherwise dispose of any
assets of the Borrower or any Subsidiary other than (a) dispositions of
inventory in the ordinary course of business, (b) dispositions of property that
is substantially worn, damaged, obsolete or, in the judgment of the Borrower, no
longer best used or useful in its business or that of any Subsidiary, (c)
transfers of assets necessary to give effect to merger or consolidation
transactions permitted by Section 8.7, and (d) the disposition of Eligible
Securities in the ordinary course of management of the investment portfolio of
the Borrower and its Subsidiaries.
8.6. Investments. Purchase, own, invest in or otherwise acquire, directly
or indirectly, any stock or other securities, or make or permit to exist any
interest whatsoever in any other Person or permit to exist any loans or advances
to any Person, except that Borrower may maintain investments or invest in:
(a) securities of any Person acquired in an Acquisition permitted
hereunder;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set forth in
Schedule 6.4;
(d) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in satisfaction or
partial satisfaction thereof in
60
<PAGE>
connection with accounts of financially troubled Persons to the extent
reasonably necessary in order to prevent or limit loss; and
(e) investments in Guarantors;
(f) loans between the Borrower and the Guarantors described in
Section 8.4(e);
(g) other loans, advances and investments in an aggregate principal
amount at any time outstanding not to exceed $2,500,000.
8.7. Merger or Consolidation. (a) Consolidate with or merge into any other
Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales permitted under Section 8.5(a),
(b) and (d)); provided, however, (i) any Subsidiary of the Borrower may merge or
transfer all or substantially all of its assets into or consolidate with the
Borrower or any wholly-owned Subsidiary of the Borrower, and (ii) any other
Person may merge into or consolidate with the Borrower or any wholly-owned
Subsidiary and any Subsidiary may merge into or consolidate with any other
Person in order to consummate an Acquisition permitted by Section 8.2, provided
further, that any resulting or surviving entity shall execute and deliver such
agreements and other documents, including a Facility Guaranty, and take such
other action as the Agent may require to evidence or confirm its express
assumption of the obligations and liabilities of its predecessor entities under
the Loan Documents.
8.8. Transactions with Affiliates. Other than transactions permitted under
Section 8.7, enter into any transaction after the Closing Date, including,
without limitation, the purchase, sale, lease or exchange of property, real or
personal, or the rendering of any service, with any Affiliate of the Borrower,
except (a) that such Persons may render services to the Borrower or its
Subsidiaries for compensation at the same rates generally paid by Persons
engaged in the same or similar businesses for the same or similar services, (b)
that the Borrower or any Subsidiary may render services to such Persons for
compensation at the same rates generally charged by the Borrower or such
Subsidiary and (c) in either case in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's (or any Subsidiary's)
business consistent with past practice of the Borrower and its Subsidiaries and
upon fair and reasonable terms no less favorable to the Borrower (or any
Subsidiary) than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate.
8.9. Compliance with ERISA. With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a material liability on the part of the Borrower or any ERISA
Affiliate to the PBGC; or
61
<PAGE>
(b) permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities in a material respect; or
(c) permit a material accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any Multiemployer
Plan which the Borrower or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to engage,
in any prohibited transaction under Section 406 of ERISA or Sections 4975
of the Code for which a civil penalty pursuant to Section 502(i) of ERISA
or a tax pursuant to Section 4975 of the Code may be imposed; or
(f) permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Pension Plan
which establishment or amendment could result in material liability to the
Borrower or any ERISA Affiliate or increase the obligation of the Borrower
or any ERISA Affiliate to a Multiemployer Plan which liability or
increase, individually or together with all similar liabilities and
increases, is in excess of $10,000; or
(g) fail, or permit the Borrower or any ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in compliance
in all material respects with the provisions of ERISA, the Code, all
applicable Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof.
8.10. Fiscal Year. Change its Fiscal Year.
8.11. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 8.8.
8.12. Limitations on Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property, whether now owned or hereafter acquired in a related
transaction or series of related transactions, which has been or is to be sold
or transferred by the Borrower or any Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or any
Subsidiary.
62
<PAGE>
8.13. Change in Control. Cause, suffer or permit to exist or occur any
Change of Control.
8.14. Rate Hedging Obligations. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except pursuant to Swap Agreements in an aggregate notional
amount not to exceed at any time 25% of the Total Revolving Credit Commitment or
as otherwise agreed by the Borrower and the Agent.
8.15. Prepayments, Etc. of Indebtedness. (a) Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Indebtedness other than the Loans; or
(b) amend, modify or change in any manner any term or condition of any
Indebtedness described in Section 8.4(a), (e) or (f) or any lease so that the
terms and conditions thereof are less favorable to the Agent and the Lenders
than the terms of such Indebtedness or leases as of the Closing Date.
63
<PAGE>
ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default. If any one or more of the following events (herein
called "Events of Default") shall occur for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any Governmental
Authority), that is to say:
(a) if default shall be made in the due and punctual payment of the
principal of any Loan or other Obligation, when and as the same shall be
due and payable whether pursuant to any provision of Article II, maturity,
by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment of any
amount of interest on any Loan or other Obligation or of any fees or other
amounts payable to any of the Lenders or the Agent within five (5) days
after the date on which the same shall be due and payable; or
(c) if default shall be made in the performance or observance of any
covenant set forth in Section 7.7, 7.11, 7.12, 7.19 or Article VIII;
(d) if a default shall be made in the performance or observance of,
or shall occur under, any covenant, agreement or provision contained in
this Agreement or the Notes (other than as described in clauses (a), (b)
or (c) above) and such default shall continue for 30 or more days after
the earlier of receipt of notice of such default by the Authorized
Representative from the Agent or an officer of the Borrower becomes aware
of such default, or if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or provision
contained in any of the other Loan Documents (beyond any applicable grace
period, if any, contained therein) or in any instrument or document
evidencing or creating any obligation, guaranty, or Lien in favor of the
Agent or any of the Lenders or delivered to the Agent or any of the
Lenders in connection with or pursuant to this Agreement or any of the
Obligations, or if any Loan Document ceases to be in full force and effect
(other than by reason of any action by the Agent), or if without the
written consent of the Lenders, this Agreement or any other Loan Document
shall be disaffirmed or shall terminate, be terminable or be terminated or
become void or unenforceable for any reason whatsoever (other than in
accordance with its terms in the absence of default or by reason of any
action by the Lenders or the Agent); or
(e) if there shall occur (i) a default, which is not waived, in the
payment of any principal, interest, premium or other amount with respect
to any Indebtedness or Rate Hedging Obligation (other than the Loans and
other Obligations) of the Borrower or any Subsidiary in an amount not less
than $100,000 in the aggregate outstanding, or (ii) a default, which is
not waived, in the performance, observance or fulfillment of any term or
covenant contained in any agreement or instrument under or pursuant to
which
64
<PAGE>
any such Indebtedness or Rate Hedging Obligation in an amount in excess of
$100,000 may have been issued, created, assumed, guaranteed or secured by
the Borrower or any Subsidiary, or (iii) any other event of default as
specified in any agreement or instrument under or pursuant to which any
such Indebtedness or Rate Hedging Obligation may have been issued,
created, assumed, guaranteed or secured by the Borrower or any Subsidiary,
and such default or event of default described in this clause (e) shall
continue for more than the period of grace, if any, therein specified, or
such default or event of default shall permit the holder of any such
Indebtedness (or any agent or trustee acting on behalf of one or more
holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report or
statement at any time furnished to the Agent or any Lender by or on behalf
of the Borrower or any other Credit Party pursuant to or in connection
with any Loan Document, or otherwise, shall be false or misleading in any
material respect when given; or
(g) if the Borrower or any Subsidiary or other Credit Party shall be
unable to pay its debts generally as they become due; file a petition to
take advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole or
any substantial part of its property; file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator
or conservator of the Borrower or any Subsidiary or other Credit Party or
of the whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of sixty
(60) days, or approve a petition filed against the Borrower or any
Subsidiary seeking liquidation, reorganization or arrangement or similar
relief under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state, which petition is
not dismissed within sixty (60) days; or if, under the provisions of any
other law for the relief or aid of debtors, a court of competent juris
diction shall assume custody or control of the Borrower or any Subsidiary
or other Credit Party or of the whole or any substantial part of its
properties, which control is not relinquished within sixty (60) days; or
if there is commenced against the Borrower or any Subsidiary or other
Credit Party any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state which proceeding or petition remains undismissed for a period of
sixty (60) days; or if the Borrower or any Subsidiary or other Credit
Party takes any action to indicate its consent to or approval of any such
proceeding or petition; or
(i) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $50,000 is rendered against the Borrower or any
Subsidiary, or (ii) there is any attachment,
65
<PAGE>
injunction or execution against any of the Borrower's or Subsidiaries'
properties for any amount in excess of $50,000 in the aggregate; and such
judgment, attachment, injunction or execution remains unpaid, unstayed,
undischarged, unbonded or undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend all
or any part of its operations material to the conduct of the business of
the Borrower or such Subsidiary for a period of more than 60 days; or
(k) if the Borrower or any Subsidiary shall breach any of the
material terms or conditions of any agreement under which any Rate Hedging
Obligations permitted hereby is created and such breach shall continue
beyond any grace period, if any, relating thereto pursuant to the terms of
such agreement, or if the Borrower or any Subsidiary shall disaffirm or
seek to disaffirm any such agreement or any of its obligations thereunder;
or
(l) if there shall occur and not be waived an Event of Default as
defined in any of the other Loan Documents; or
(m) if two or more of John Fitzgerald, Lee Edelstein, Michael
Dinkins, John Jordan or Douglas Rebak shall cease during any period of six
(6) consecutive months to be employed by the Borrower as a key executive;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be taken: (i)
the Agent, with the consent of the Required Lenders, may, and at the
direction of the Required Lenders shall, declare any obligation of
the Lenders to make further Loans terminated, whereupon the
obligation of each Lender to make further Loans hereunder shall
terminate immediately, and (ii) the Agent shall at the direction of
the Required Lenders, at their option, declare by notice to the
Borrower any or all of the Obligations to be immediately due and
payable, and the same, including all interest accrued thereon and
all other obligations of the Borrower to the Agent and the Lenders,
shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of any kind,
all of which are hereby expressly waived, anything contained herein
or in any instrument evidencing the Obligations to the contrary
notwithstanding; provided, however, that notwithstanding the above,
if there shall occur an Event of Default under clause (g) or (h)
above, then the obligation of the Lenders to make Loans hereunder
shall automatically terminate and any and all of the Obligations
shall be immediately due and payable without the necessity of any
action by the Agent or the Required Lenders or notice to the Agent
or the Lenders; and
66
<PAGE>
(B) the Agent and each of the Lenders shall have all of the
rights and remedies available under the Loan Documents or under any
applicable law.
9.2. Agent to Act. In case any one or more Events of Default shall occur
and not have been waived, the Agent may, and at the direction of the Required
Lenders shall, proceed to protect and enforce their rights or remedies either by
suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
9.3. Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
9.4. No Waiver. No course of dealing between the Borrower and any Lender
or the Agent or any failure or delay on the part of any Lender or the Agent in
exercising any rights or remedies under any Loan Document or otherwise available
to it shall operate as a waiver of any rights or remedies and no single or
partial exercise of any rights or remedies shall operate as a waiver or preclude
the exercise of any other rights or remedies hereunder or of the same right or
remedy on a future occasion.
9.5. Allocation of Proceeds. If an Event of Default has occurred and not
been waived, and the maturity of the Notes has been accelerated pursuant to
Article IX hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Agent in the following order:
(a) amounts due to the Lenders pursuant to Sections 2.10 and 11.5;
(b) amounts due to the Agent pursuant to Section 10.9;
(c) payments of interest on Loans to be applied for the ratable
benefit of the Lenders;
(d) payments of principal of Loans to be applied for the ratable
benefit of the Lenders;
(e) amounts due to the Lenders pursuant to Sections 7.15 and 11.9;
(f) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders;
67
<PAGE>
(g) amounts due to any of the Lenders in respect of Obligations
consisting of liabilities under any Swap Agreement with any of the Lenders
on a pro rata basis according to the amounts owed; and
(h) any surplus remaining after application as provided for herein,
to the Borrower or otherwise as may be required by applicable law.
68
<PAGE>
ARTICLE X
The Agent
10.1. Appointment, Powers, and Immunities. Each Lender hereby irrevocably
appoints and authorizes the Agent to act as its agent under this Agreement and
the other Loan Documents with such powers and discretion as are specifically
delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
The Agent (which term as used in this sentence and in Section 10.5 and the first
sentence of Section 10.6 hereof shall include its affiliates and its own and its
affiliates' officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made in
or in connection with any Loan Document or any certificate or other
document referred to or provided for in, or received by any of them under,
any Loan Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Loan Document, or any other document
referred to or provided for therein or for any failure by any Credit Party
or any other Person to perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by any Credit Party or the satisfaction of any condition or to
inspect the property (including the books and records) of any Credit Party
or any of its Subsidiaries or affiliates;
(d) shall not be required to initiate or conduct any litigation or
collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted to be
taken by it under or in connection with any Loan Document, except for its
own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
10.2. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements
69
<PAGE>
of legal counsel (including counsel for any Credit Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until the Agent receives and accepts an Assignment and Acceptance executed
in accordance with Section 11.1 hereof. As to any matters not expressly provided
for by this Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding on all of the Lenders; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Loan Document or applicable law or unless it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking any such action.
10.3. Defaults. The Agent shall not be deemed to have knowledge or notice
of the occurrence of a Default or Event of Default unless the Agent has received
written notice from a Lender or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall (subject to Section 10.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
10.4. Rights as Lender. With respect to its Revolving Credit Commitment
and the Loans made by it, NationsBank (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. NationsBank
(and any successor acting as Agent) and its affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, make
investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with any Credit Party or any of its
Subsidiaries or affiliates as if it were not acting as Agent, and NationsBank
(and any successor acting as Agent) and its affiliates may accept fees and other
consideration from any Credit Party or any of its Subsidiaries or affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
10.5. Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under Section 11.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Agent
(including by any Lender) in any way relating to or arising out of any Loan
Document or the transactions contemplated thereby
70
<PAGE>
or any action taken or omitted by the Agent under any Loan Document, provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Person to be indemnified.
Without limitation of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs or expenses payable by
the Borrower under Section 11.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements contained
in this Section 10.5 shall survive payment in full of the Loans and all other
amounts payable under this Agreement.
10.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Loan Parties and their Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any
Credit Party or any of its Subsidiaries or affiliates that may come into the
possession of the Agent or any of its affiliates.
10.7. Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent; provided,
however, that so long as no Default or Event of Default has occurred, such
appointment shall be subject to the Borrower's consent, which consent shall not
be unreasonably withheld. If no successor Agent shall have been so appointed by
the Required Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a commercial bank organized under the laws of the United States of
America having combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor, such successor
shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges, and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
X shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
10.8. Sharing of Payments, etc. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than pursuant
to Article IV) which results in its receiving more than its pro rata share of
the aggregate payments with respect to all of the Obligations (other than any
payment expressly provided hereunder to be distributed on other than a pro rata
basis and payments pursuant to Article IV), then (a) such Lender shall be deemed
to have simultaneously
71
<PAGE>
purchased from the other Lenders a share in their Obligations so that the amount
of the Obligations held by each of the Lenders shall be pro rata and (b) such
other adjustments shall be made from time to time as shall be equitable to
insure that the Lenders share such payments ratably; provided, however, that for
purposes of this Section 10.8 the term "pro rata" shall be determined with
respect to the Revolving Credit Commitment of each Lender and to the Total
Revolving Credit Commitments after subtraction in each case of amounts, if any,
by which any such Lender has not funded its share of the outstanding Loans and
Obligations. If all or any portion of any such excess payment is thereafter
recovered from the Lender which received the same, the purchase provided in this
Section 10.8 shall be rescinded to the extent of such recovery, without
interest. The Borrower expressly consents to the foregoing arrangements and
agrees that each Lender so purchasing a portion of the other Lenders'
Obligations may exercise all rights of payment (including, without limitation,
all rights of set-off, banker's lien or counterclaim) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
10.9. Fees. The Borrower agrees to pay to the Agent, for its individual
account, an annual Agent's fee as from time to time agreed to by the Borrower
and Agent in writing.
72
<PAGE>
ARTICLE XI
Miscellaneous
11.1. Assignments and Participations. (a) Each Lender may assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Loans,
its Note, and its Revolving Credit Commitment; provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under this Agreement, any
such partial assignment shall be in an amount at least equal to $5,000,000 or an
integral multiple of $500,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a constant, and
not varying, percentage of all of its rights and obligations under this
Agreement and the Note; and
(iv) the parties to such assignment shall execute and deliver to the
Agent for its acceptance an Assignment and Acceptance in the form of Exhibit B
hereto, together with any Note subject to such assignment and a processing fee
of $5,000.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 4.6.
(b) The Agent shall maintain at its address referred to in Section 11.2 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Revolving Credit Commitment of, and principal amount of the Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto,
73
<PAGE>
together with any Note subject to such assignment and payment of the processing
fee, the Agent shall, if such Assignment and Acceptance has been completed and
is in substantially the form of Exhibit B hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all or a
portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Revolving Credit Commitment or its
Loans); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the yield protection
provisions contained in Article VI and the right of set-off contained in Section
11.3, and (iv) the Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Loans and its Note and to approve
any amendment, modification, or waiver of any provision of this Agreement (other
than amendments, modifications, or waivers decreasing the amount of principal of
or the rate at which interest is payable on such Loans or Note, extending any
scheduled principal payment date or date fixed for the payment of interest on
such Loans or Note, or extending its Revolving Credit Commitment).
(e) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time assign and pledge all or any portion of its Loans and its
Note to any Federal Reserve Bank as collateral security pursuant to Regulation A
and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning the Borrower or any
of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants,
provided that with respect to any non-public information, such prospective
assignee or participant has signed an appropriate confidentiality agreement).
11.2. Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address, telex number or telefacsimile number, as appropriate,
set forth below or such other address or number as such party shall specify by
notice hereunder:
74
<PAGE>
(a) if to the Borrower:
CulturalAccessWorldwide, Inc.
2200 Clarendon Boulevard, 11th Floor
Arlington, Virginia 22201
Attn: Michael Dinkins
Telephone: (703) 516-6425
Telefacsimile: (703) 812-9561
(b) if to the Agent:
NationsBank, National Association
6610 Rockledge Drive
Bethesda, Maryland 20817
Attention: Maria Manos
Telephone: (301) 493-7072
Telefacsimile: (301) 571-9098
with a copy to:
NationsBank, National Association
6610 Rockledge Drive
Bethesda, Maryland 20817
Attention: Commercial Banking
Telephone: (301) 493-7072
Telefacsimile: (301) 571-9098
(c) if to the Lenders:
At the addresses set forth on the signature pages hereof and
on the signature page of each Assignment and Acceptance;
(d) if to any other Credit Party, at the address set forth on the
signature page of the Facility Guaranty or Security Instrument
executed by such Credit Party, as the case may be.
11.3. Right of Set-off; Adjustments. (a) Upon the occurrence and during
the continuance of any Event of Default, each Lender (and each of its
affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its affiliates)
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement and
the Note held by such Lender, irrespective of whether such Lender shall have
made any demand under this Agreement or such Note and
75
<PAGE>
although such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section 11.3 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender may have.
(b) If any Lender (a "benefitted Lender") shall at any time receive any
payment of all or part of the Loans owing to it, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans owing to it, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans owing to it, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from a Lender pursuant to this Section 11.3 may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Person were the direct creditor of the Borrower in the amount of such
participation.
11.4. Survival. All covenants, agreements, representations and warranties
made herein shall survive the making by the Lenders of the Loans and the
execution and delivery to the Lenders of this Agreement and the Notes and shall
continue in full force and effect so long as any of Obligations remain
outstanding or any Lender has any Eurodollar Rate Loan hereunder or the Borrower
has continuing obligations hereunder unless otherwise provided herein. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements by or on behalf of the Borrower which are
contained in the Loan Documents shall inure to the benefit of the successors and
permitted assigns of the Lenders or any of them.
11.5. Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of this
Agreement, the other Loan Documents, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under the Loan Documents. The
Borrower further agrees to pay on demand all costs and expenses of the Agent and
the Lenders, if any (including, without limitation, reasonable attorneys' fees
and expenses and the cost of internal counsel), in connection with the
enforcement (whether through negotiations, legal proceedings, or otherwise) of
the Loan Documents and the other documents to be delivered hereunder.
76
<PAGE>
11.6. Amendments and Waivers. Any provision of this Agreement or any other
Loan Document may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Borrower and the Required Lenders (and, if
Article X or the rights or duties of the Agent are affected thereby, by the
Agent); provided that no such amendment or waiver shall, unless signed by all
the Lenders, (i) increase the Revolving Credit Commitment of the Lenders, (ii)
reduce the principal of or rate of interest on any Loan or any fees or other
amounts payable hereunder, (iii) postpone any date fixed for the payment of any
scheduled installment of principal of or interest on any Loan or any fees or
other amounts payable hereunder or for termination of any Revolving Credit
Commitment, or (iv) change the percentage of the Revolving Credit Commitment or
of the unpaid principal amount of the Notes, or the number of Lenders, which
shall be required for the Lenders or any of them to take any action under this
Section 11.6 or any other provision of this Agreement [or (v) release any
Guarantor or all or substantially all of the Collateral.
No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.
11.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
11.8. Termination. The termination of this Agreement shall not affect any
rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of the
Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until payment
in full of the Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, any Lender is for any reason compelled to surrender such payment to
any Person because such payment is determined to be void or voidable as a
preference, impermissible setoff, a diversion of trust funds or for any other
reason, this Agreement shall continue in full force and the Borrower shall be
liable to, and shall indemnify and hold the Agent or such Lender harmless
77
<PAGE>
for, the amount of such payment surrendered until the Agent or such Lender shall
have been finally and irrevocably paid in full. The provisions of the foregoing
sentence shall be and remain effective notwithstanding any contrary action which
may have been taken by the Agent or the Lenders in reliance upon such payment,
and any such contrary action so taken shall be without prejudice to the Agent or
the Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
11.9. Indemnification; Limitation of Liability. (a) The Borrower agrees to
indemnify and hold harmless the Agent and each Lender and each of their
affiliates and their respective officers, directors, employees, agents, and
advisors (each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Loan Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans except to the
extent such claim, damage, loss, liability, cost, or expense is found in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
In the case of an investigation, litigation or other proceeding to which the
indemnity in this Section 11.9 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by the
Borrower, its directors, shareholders or creditors or an Indemnified Party or
any other Person or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated. The
Borrower agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to it, any of its
Subsidiaries, any Guarantor, or any security holders or creditors thereof
arising out of, related to or in connection with the transactions contemplated
herein, except to the extent that such liability is found in a final
non-appealable judgment by a court of competent jurisdiction to have directly
resulted from such Indemnified Party's gross negligence or willful misconduct.
The Borrower agrees not to assert any claim against the Agent, any Lender, any
of their affiliates, or any of their respective directors, officers, employees,
attorneys, agents, and advisers, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or otherwise
relating to the Loan Documents, any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Loans.
(b) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 11.9 shall survive the payment in full of the Loans and all other
amounts payable under this Agreement.
11.10. Severability. If any provision of this Agreement or the other Loan
Documents shall be determined to be illegal or invalid as to one or more of the
parties hereto, then such provision shall remain in effect with respect to all
parties, if any, as to whom such provision is neither illegal nor invalid, and
in any event all other provisions hereof shall remain effective and binding on
the parties hereto.
78
<PAGE>
11.11. Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations and other communications between or among the parties, both oral
and written, with respect thereto.
11.12. Agreement Controls. In the event that any term of any of the Loan
Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
11.13. Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged under any of the Notes, including all
charges or fees in connection therewith deemed in the nature of interest under
applicable law shall not exceed the Highest Lawful Rate (as such term is defined
below). If the rate of interest (determined without regard to the preceding
sentence) under this Agreement at any time exceeds the Highest Lawful Rate (as
defined below), the outstanding amount of the Loans made hereunder shall bear
interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect. In addition, if when the Loans made hereunder are repaid in full the
total interest due hereunder (taking into account the increase provided for
above) is less than the total amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect, then to the extent permitted by law, the Borrower shall
pay to the Agent an amount equal to the difference between the amount of
interest paid and the amount of interest which would have been paid if the
Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
11.14. Governing Law; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE
SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE GOVERNED
BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
79
<PAGE>
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED
IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF MONTGOMERY, STATE
OF MARYLAND, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND THE BORROWER HEREBY IRREVOCABLY SUBMITS
GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUCH SUIT, ACTION OR PROCEEDING.
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED
IN SECTION 11.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF MARYLAND.
(d) NOTHING CONTAINED IN SUBSECTIONS (a) OR (b) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS
OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY
OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN
RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE
OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS
WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR
80
<PAGE>
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY
IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
11.15. Payments. All principal, interest, and other amounts to be made by
the Borrower under this Agreement and the other Loan Documents shall be made to
the Agent at the Principal Office in Dollars and in immediately available funds,
without setoff, deduction or counterclaim. Subject to the definition of
"Interest Period" herein, whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time in such case shall be included in the computation of interest and fees,
as applicable, and as the case may be.
[Signatures on following pages]
81
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day and
year first above written.
CULTURALACCESSWORLDWIDE, INC.
WITNESS:
/s/ John Hamerski By: /s/ Michael Dinkins
------------------------
Name: Michael Dinkins
Title: Senior Vice President
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By: /s/ Maria Manos
------------------------
Name: Maria Manos
Title: Vice President
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION
By: /s/ Maria Manos
------------------------
Name: Maria Manos
Title: Vice President
Lending Office for Base Rate Loans:
NationsBank, National Association
6610 Rockledge Drive
Bethesda, MD 20817
Attention: Maria Manos
Telephone: (301) 493-7072
Telefacsimile: (301) 571-9098
Wire Transfer Instructions:
NationsBank, National Association
ABA# 052001633
Account No.: 2055045012457
Reference: CulturalAccess Worldwide, Inc.
#522848
Attention: Jennefer Pettus
Lending Office for Eurodollar Rate Loans:
NationsBank, National Association
6610 Rockledge Drive
Bethesda, MD 20817
Attention: Maria Manos
Telephone: (301) 493-7072
Telefacsimile: (301) 571-9098
Wire Transfer Instructions:
NationsBank, National Association
ABA# 052001633
Account No.: 2055045012457
Reference: CulturalAccess Worldwide, Inc.
#522848
Attention: Jennefer Pettus
<PAGE>
EXHIBIT A
Applicable Commitment Percentage
Applicable
Revolving Credit Commitment
Lender Commitment Percentage
------ ---------- ----------
NationsBank, National Association
$30,000,000 100%
----------- ---
$30,000,000 100%
A-1
<PAGE>
EXHIBIT B
Form of Assignment and Acceptance
Reference is made to the Credit Agreement dated as of April 9, 1998 (the
"Credit Agreement") among CulturalAccessWorldwide, Inc., a Delaware corporation
(the "Borrower"), the Lenders (as defined in the Credit Agreement) and
NationsBank, N.A., as agent for the Lenders (the "Agent"). Terms defined in the
Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, WITHOUT RECOURSE
and without representation or warranty except as expressly set forth herein, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor's rights and obligations under the Credit Agreement and the
other Loan Documents as of the date hereof equal to the percentage interest
specified on Schedule 1 of all outstanding rights and obligations under the
Credit Agreement and the other Loan Documents. After giving effect to such sale
and assignment, the Assignee's Loan and the amount of the Loans owing to the
Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its obligations
under the Loan Documents or any other instrument or document furnished pursuant
thereto; and (iv) attaches the Note held by the Assignor and requests that the
Agent exchange such Note for new Notes payable to the order of the Assignee in
an amount equal to the Revolving Credit Commitment assumed by the Assignee
pursuant hereto and to the Assignor in an amount equal to the Revolving Credit
Commitment retained by the Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 7.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
B-1
<PAGE>
Agreement are required to be performed by it as a Lender; and (vi) attaches any
U.S. Internal Revenue Service or other forms required under Section 4.6.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The effective
date for this Assignment and Acceptance (the "Effective Date") shall be the date
of acceptance hereof by the Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telefacsimile
shall be effective as delivery of a manually executed counterpart of this
Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1
to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
B-2
<PAGE>
Schedule 1
Percentage interest assigned: ________%
Assignee's Commitment: $_______
Aggregate outstanding principal amount
of Loans assigned: $_______
Principal amount of Note payable to Assignee: $_______
Principal amount of Note payable to Assignor: $_______
Effective Date (if other than date
of acceptance by Agent): *_______, 19____
[NAME OF ASSIGNOR], as Assignor
By:_____________________________
Title:
Dated:______, 19 ____
[NAME OF ASSIGNEE], as Assignee
By:______________________________
Title:
Domestic Lending Office:
Eurodollar Lending Office:
* This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to the Agent.
B-3
<PAGE>
Accepted [and Approved] **
this ___ day of ___________, 19 _____
NATIONSBANK, N.A.
By:______________________________
Title:
[Approved this ____ day
of ____________, 19____
CULTURALACCESSWORLDWIDE, INC.
By:_________________________]**
Title:
** Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".
B-4
<PAGE>
EXHIBIT C
Notice of Appointment (or Revocation) of Authorized Representative
Reference is hereby made to the Credit Agreement dated as of April 9,
1998 (the "Agreement") among CulturalAccessWorldwide, Inc., a Delaware
corporation (the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, National Association, as Agent for the Lenders ("Agent").
Capitalized terms used but not defined herein shall have the respective meanings
therefor set forth in the Agreement.
The Borrower hereby nominates, constitutes and appoints each individual
named below as an Authorized Representative under the Loan Documents, and hereby
represents and warrants that (i) set forth opposite each such individual's name
is a true and correct statement of such individual's office (to which such
individual has been duly elected or appointed), a genuine specimen signature of
such individual and an address for the giving of notice, and (ii) each such
individual has been duly authorized by the Borrower to act as Authorized
Representative under the Loan Documents:
Name and Address Office Specimen Signature
- ------------------- ------------------------ ------------------------
- -------------------
- -------------------
- ------------------- ------------------------ ------------------------
- ------------------- ------------------------ ------------------------
- -------------------
Borrower hereby revokes (effective upon receipt hereof by the Agent) the prior
appointment of ________________ as an Authorized Representative.
This the ___ day of __________________, 19____.
CULTURALACCESSWORLDWIDE, INC.
By:____________________________
Name:__________________________
Title:_________________________
C-1
<PAGE>
EXHIBIT D
Form of Borrowing Notice
To: NationsBank, National Association,
as Agent
__________________________________
__________________________________
Charlotte, North Carolina 28255
Attention:________________________
Telefacsimile:____________________
Reference is hereby made to the Credit Agreement dated as of April 9,
1998 (the "Agreement") among CulturalAccessWorldwide, Inc. (the "Borrower"), the
Lenders (as defined in the Agreement), and NationsBank, National Association, as
Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein
shall have the respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent that Loans of the type and amount set forth below be made on the
date indicated:
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
- ----------- --------- --------- ---------------
Revolving Loan
- --------------
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or four months.
(2) Must be $500,000 or if greater an integral multiple of $10,000.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan.
The Borrower hereby requests that the proceeds of Loans described in
this Borrowing Notice be made available to the Borrower as follows: [insert
transmittal instructions] .
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and
D-1
<PAGE>
2. All the representations and warranties set forth in Article VI of
the Agreement and in the Loan Documents (other than those expressly stated to
refer to a particular date) are true and correct as of the date hereof except
that the reference to the financial statements in Section 6.6(a) of the
Agreement are to those financial statements most recently delivered to you
pursuant to Section 7.1 of the Agreement (it being understood that any financial
statements delivered pursuant to Section 7.1(b) have not been certified by
independent public accountants) and attached hereto are any changes to the
Schedules referred to in connection with such representations and warranties.
3. All conditions contained in the Agreement to the making of any Loan
requested hereby have been met or satisfied in full.
CULTURALACCESSWORLDWIDE, INC.
BY: ___________________________________
Authorized Representative
DATE: _________________________________
D-2
<PAGE>
EXHIBIT E
Form of Interest Rate Selection Notice
To: NationsBank, National Association, as Agent
__________________________________
__________________________________
Attention: __________________
Telefacsimile: (___) ___-____
Reference is hereby made to the Credit Agreement dated as of April 9,
1998 (the "Agreement") among CulturalAccessWorldwide, Inc. (the "Borrower"), the
Lenders (as defined in the Agreement), and NationsBank, National Association, as
Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein
shall have the respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent of the following selection of a type of Loan and Interest Period:
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
- ----------- --------- --------- ---------------
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
(1) For any Eurodollar Rate Loan one, two, three or four months.
(2) Must be $500,000 or if greater an integral multiple of $10,000.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan.
CULTURALACCESSWORLDWIDE, INC.
BY:_____________________________________
Authorized Representative
DATE:___________________________________
E-1
<PAGE>
EXHIBIT F
Form of Note
Promissory Note
$30,000,000 __________, __________
April ___, 1998
FOR VALUE RECEIVED, CULTURALACCESSWORLDWIDE, INC., a Delaware
corporation having its principal place of business located in Arlington,
Virginia (the "Borrower"), hereby promises to pay to the order of NATIONSBANK,
NATIONAL ASSOCIATION (the "Lender"), in its individual capacity, at the office
of NATIONSBANK, NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"),
located at One Independence Center, 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the Agent
may designate in writing) at the times set forth in the Credit Agreement dated
as of April 9, 1998 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent (the "Agreement" -- all capitalized
terms not otherwise defined herein shall have the respective meanings set forth
in the Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of THIRTY MILLION DOLLARS
($30,000,000) or, if less than such principal amount, the aggregate unpaid
principal amount of all Loans made by the Lender to the Borrower pursuant to the
Agreement on the Revolving Credit Termination Date or such earlier date as may
be required pursuant to the terms of the Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates provided in Article II of the Agreement.
All or any portion of the principal amount of Loans may be prepaid or required
to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining principal amount and accrued but unpaid
interest shall bear interest which shall be payable on demand at the rates per
annum set forth in the proviso to Section 2.2 (a) of the Agreement. Further, in
the event of such acceleration, this Revolving Note shall become immediately due
and payable, without presentation, demand, protest or notice of any kind, all of
which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorneys' fees, and interest due
hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
F-1
<PAGE>
This Note is one of the Notes referred to in the Agreement and is issued
pursuant to and entitled to the benefits and security of the Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions upon which the Loans evidenced hereby were or are made and are to be
repaid. This Note is subject to certain restrictions on transfer or assignment
as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made, executed
and delivered by its duly authorized representative as of the date and year
first above written, all pursuant to authority duly granted.
CULTURALACCESSWORLDWIDE, INC.
WITNESS:
_________________ By:___________________________________________
Name:_________________________________________
_________________ Title:________________________________________
F-2
<PAGE>
EXHIBIT G
Form of Pledge Agreement
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement") is made and entered into as
of this ___ day of _________, ____ by and between THE UNDERSIGNED (the
"Pledgor"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States, as Agent
(the "Agent") for each of the financial institutions (the "Lenders" and
collectively with the Agent the "Secured Parties") now or hereafter party to the
Credit Agreement (as defined below). All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have agreed to provide to Cultural Access
Worldwide, Inc. (the "Borrower") a revolving credit facility pursuant to the
Credit Agreement dated as of April 9, 1998 among the Borrower, the Agent and the
Lenders (as from time to time amended, revised, modified, supplemented, or
amended and restated the "Credit Agreement"); and
WHEREAS, the Guarantor will materially benefit from the Loans and Advances
made under the Credit Agreement and the Guarantor is a party to that certain
Guaranty Agreement (the "Guaranty") dated as of the date hereof pursuant to
which the Guarantor guaranteed the Obligations of the Borrower; and
WHEREAS, as collateral security for the payment and performance of all
obligations and liabilities of the Pledgor under the Guaranty and all of the
Borrower's Obligations, the Pledgor is willing to pledge and grant to the Agent
for the benefit of the Lenders a security interest in all of the issued and
outstanding shares of capital stock, whether now in existence or hereafter
issued, of each of its Domestic Subsidiaries, and at least 65% of the issued and
outstanding shares of capital stock or equivalent indicia of ownership under the
law or practice of any foreign jurisdiction, whether now in existence or
hereafter issued, of each of its Direct Foreign Subsidiaries, all of which are
required to be subject to a Pledge Agreement pursuant to the Credit Agreement
(the "Pledged Stock"), including without limitation the Pledged Stock in such
Subsidiaries more particularly described on Schedule I hereto (such
Subsidiaries, together with all other Subsidiaries whose capital stock may be
required to be subject to a Pledge Agreement from time to time, are hereinafter
referred to collectively as the "Pledged Subsidiaries"), as well as the
Partnership Interests listed on Schedule II hereto together with all other
Partnership Interests that may be required to be subject to a Pledge
G-1
<PAGE>
Agreement (the "Partnership Interests" and collectively with the Pledged Stock,
the "Pledged Securities"); and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. Pledge of Stock and Partnership Interests; Other Collateral.
(a) As collateral security for the payment and performance of all
Obligations of the Borrower under the Credit Agreement and all obligations of
the Pledgor under the Guaranty (collectively the "Secured Obligations"), each
Pledgor hereby pledges and collaterally assigns to the Agent for the benefit of
the Lenders, and grants to the Agent for the benefit of the Lenders a first
priority lien and security interest in, the Pledged Securities and all of the
following:
(i) all cash, securities, dividends, rights, and other
property at any time and from time to time declared or distributed in
respect of or in exchange for any or all of the Pledged Securities, other
than cash dividends permitted to be retained by the Pledgor under Section
9 hereof;
(ii) all other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such property and all cash,
securities, interest, dividends, rights, and other property at any time
and from time to time declared or distributed in respect of or in exchange
for any or all of the Pledged Securities; and
(iii) all proceeds of any of the foregoing.
All such Pledged Securities, certificates, instruments, cash, securities,
interest, dividends, rights and other property referred to in this Section 1,
other than cash dividends issued in respect of such Pledged Securities that are
permitted to be retained by the Pledgor under Section 9 hereof, are herein
collectively referred to as the "Collateral." All of the Pledged Securities
described on Schedules I and II in effect from time to time are currently owned
by the respective Pledgor and represented by the stock certificates listed on
Schedules I and II hereto. Certificates evidencing all the Pledged Securities on
the Closing Date, together with stock powers or powers of assignment duly
executed in blank by the appropriate Pledgor, have been delivered to the Agent.
(b) Each Pledgor agrees to deliver all the Collateral to the Agent at such
location or locations as the Agent shall from time to time designate by written
notice pursuant to Section 25 hereof for its custody at all times until
termination of this Agreement, together with such instruments of assignment and
transfer as requested by the Agent.
(c) The Pledgor agrees to deliver all share certificates, documents,
agreements, financing statements, amendments thereto, assignments or other
writings as the Agent may reasonably request to carry out the terms of this
Agreement or to protect or enforce the lien and security interest in the
G-2
<PAGE>
Collateral hereunder granted thereby to the Agent for the benefit of the Lenders
and further agrees to do and cause to be done all things determined by the Agent
to be reasonably necessary to perfect and keep in full force the Lien in the
Collateral hereunder granted thereby in favor of the Agent for the benefit of
the Lenders, including, but not limited to, the prompt payment of all documented
out-of-pocket fees and expenses incurred in connection with any filings made to
perfect or continue the lien and security interest in the Collateral hereunder
granted thereby in favor of the Agent for the benefit of the Lenders. The
Pledgor agrees to make appropriate entries upon its books and records (including
without limitation its stock record and transfer books) disclosing the Lien in
the Collateral hereunder granted thereby to the Agent for the benefit of the
Lenders hereunder.
(d) All advances, charges, costs and expenses, including reasonable
attorneys' fees, incurred or paid by the Agent or any Lender in exercising any
right, power or remedy conferred by this Agreement, or in the enforcement
thereof, shall become a part of the Secured Obligations and shall be paid to the
Agent for the benefit of the Lenders by the Pledgor immediately upon demand
therefor, with interest thereon until paid in full at the interest set forth in
the Credit Agreement so long as there is no Default or Event of Default and if
there is a Default or Event of Default at the Default Rate for Base Rate Loans.
2. Status of Pledged Stock. Each Pledgor hereby represents and warrants to
the Agent for the benefit of the Lenders that (i) all of the Partnership
Interests are validly issued and outstanding and constitute all of the equity
interests or securities of the Partnership now owned, beneficially or of record,
by such Pledgor, (ii) all of the shares of Pledged Stock are validly issued and
outstanding, fully paid and nonassessable and constitute all the authorized,
issued and outstanding shares of common stock of each of the Pledged
Subsidiaries which are Domestic Subsidiaries and at least 65% of the authorized,
issued and outstanding shares of common stock of each of the Pledged
Subsidiaries which are Direct Foreign Subsidiaries, (iii) each Pledgor is the
registered and record and beneficial owner of its Pledged Securities, free and
clear of all Liens, charges, equities, encumbrances and restrictions on pledge
or transfer (other than the Liens created under the Loan Documents and
restrictions imposed by applicable law), (iv) the Pledgor has full corporate
power, legal right and lawful authority to execute this Agreement and to pledge,
assign and transfer such Pledged Securities in the manner and form hereof, and
(v) the pledge, assignment and delivery of such Pledged Securities by the
Pledgor to the Agent for the benefit of the Lenders pursuant to this Agreement
creates, together with the delivery of the certificates evidencing the Pledged
Securities, which delivery has heretofore been accomplished, a valid and
perfected first priority security interest in such Pledged Securities in favor
of the Agent for the benefit of the Lenders, securing the payment of the Secured
Obligations. Except as permitted under Sections 8.5 or 8.7 of the Credit
Agreement, none of the Pledged Securities (nor any interest therein or thereto)
shall be sold, transferred or assigned, nor any Lien created therein, without
the Agent's prior written consent, which may be withheld for any reason. Each
Pledgor covenants with the Agent for the benefit of the Lenders that it shall at
all times cause the Pledged Stock to be represented by the certificates now and
hereafter delivered to the Agent in accordance with Section 1 hereof and that it
shall not cause, suffer or permit any of the Pledged Subsidiaries to issue any
capital stock, or securities convertible into, or exercisable or exchangeable
for, capital stock, at any time during the term of this Agreement other than to
the Pledgor and subject to this Agreement pursuant to Section
G-3
<PAGE>
23 hereof. Each Pledgor covenants with Agent that it shall at all times cause
the Partnership Interests to be and remain uncertificated and the Lien created
hereunder to be registered on the books and records of each Partnership
maintained to record the ownership and transfer of ownership of Partnership
Interests, and in the event, notwithstanding the foregoing, the Partnership
Interests or any of them are certificated, to deliver such certificates promptly
to the Agent together with such instruments of assignment and transfer duly
executed in blank by such Pledgor as the Agent shall request. Each Pledgor
covenants with the Agent for the benefit of the Lenders that if at any time the
Pledged Securities shall not be represented by the certificates being delivered
to the Agent simultaneously herewith or pursuant to the immediately preceding
sentence, the Pledgor shall immediately cause to be delivered to the Agent
replacement certificates representing the Pledged Securities in accordance with
Section 1 hereof.
3. Preservation and Protection of Collateral.
(a) The Agent shall be under no duty or liability with respect to the
collection, protection or preservation of the Collateral, or otherwise, other
than the obligation to deal with the Collateral while in its possession in the
same manner as the Agent deals with similar securities or property for its own
account.
(b) Each Pledgor agrees to pay when due all taxes, charges, Liens and
assessments against the Collateral, unless being contested in good faith by
appropriate proceedings diligently conducted and against which adequate reserves
have been established in accordance with GAAP and evidenced to the reasonable
satisfaction of the Agent and provided further that all enforcement proceedings
in the nature of levy or foreclosure are effectively stayed. Upon the failure of
any Pledgor to so pay or contest such taxes, charges, Liens or assessments, the
Agent at its option may pay or contest any of them (the Agent having the sole
right to determine the legality or validity and the amount necessary to
discharge such taxes, charges, Liens or assessments).
4. Default. Upon the occurrence and during the continuance of any Event of
Default, the Agent is given full power and authority to sell, assign and deliver
or collect the whole or any part of the Collateral, or any substitute therefor
or any addition thereto, in one or more sales, with or without any previous
demands or demand of performance or, to the extent permitted by law, notice or
advertisement, in such order as the Agent may elect; and any such sale may be
made either at public or private sale at the Agent's place of business or
elsewhere, either for cash or upon credit or for future delivery, at such price
as the Agent may reasonably deem fair; and the Agent may be the purchaser of any
or all Collateral so sold and hold the same thereafter in its own right free
from any claim of any Pledgor or right of redemption. Demands of performance,
advertisements and presence of property and sale and notice of sale are hereby
waived to the extent permissible by law and the Pledgor acknowledges that the
Collateral is of a type customarily sold on a recognized market. Any sale
hereunder may be conducted by an auctioneer or any officer or agent of the
Agent. Each Pledgor recognizes that the Agent may be unable to effect a public
sale of the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Securities Act"), and applicable law,
and may be otherwise delayed or adversely affected in effecting any sale by
reason of present or future restrictions thereon imposed by governmental
authorities, and that as a
G-4
<PAGE>
consequence of such prohibitions and restrictions the Agent may be compelled (i)
to resort to one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire the stock for their own
account, for investment and not with a view to the distribution or resale
thereof, or (ii) to seek regulatory approval of any proposed sale or sales, or
(iii) to limit the amount of Collateral sold to any Person or group. Each
Pledgor agrees and acknowledges that private sales so made may be at prices and
upon terms less favorable to the Pledgor than if such Collateral was sold either
at public sales or at private sales not subject to other regulatory
restrictions, and that the Agent has no obligation to delay the sale of any of
the Collateral for the period of time necessary to permit the issuer of such
Collateral to register or otherwise qualify the Pledged Securities, even if such
issuer would agree to register or otherwise qualify for public sale under the
Securities Act or applicable state law. Each Pledgor agrees that private sales
made under the foregoing circumstances will not, for that reason, be deemed to
have been made in a manner which is not commercially reasonable. Each Pledgor
hereby acknowledges that a ready market may not exist for the Pledged Securities
since it is not traded on a national securities exchange or quoted on an
automated quotation system and agrees and acknowledges that in such event the
Pledged Securities may be sold for an amount less than a pro rata share of the
fair market value of the issuer's assets minus its liabilities. In addition to
the foregoing, the Lenders may exercise such other rights and remedies as may be
available under the Loan Documents, at law or in equity.
5. Proceeds of Sale. The proceeds of the sale of any of the Collateral and
all sums received or collected from or on account of such Collateral shall be
applied to the payment of expenses incurred or paid by the Agent in connection
with any holding, sale, transfer or delivery of the Collateral, to the payment
of any other costs, charges, reasonable attorneys' fees or expenses mentioned
herein, and to the payment of the Secured Obligations or any part thereof, all
in such order and manner as is provided in Section 9.5 of the Credit Agreement.
The Agent shall, upon satisfaction in full of all such Secured Obligations, pay
any balance to the Pledgor or otherwise as may be required by applicable law.
6. Presentments, Demands and Notices. The Agent shall not be under any
duty or obligation whatsoever to make or give any presentments, demands for
performances, notices of nonperformance, protests, notice of protest or notice
of dishonor in connection with any obligations or evidences of indebtedness held
thereby as collateral, or in connection with any obligations or evidences of
indebtedness which constitute in whole or in part the Secured Obligations
secured hereunder.
7. Attorney-in-Fact. Each Pledgor hereby appoints the Agent as such
Pledgor's attorney-in-fact for the purposes of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is coupled with an interest and is irrevocable; provided, that the
Agent shall have and may exercise rights under this power of attorney only upon
the occurrence and during the continuance of an Event of Default. Without
limiting the generality of the foregoing, upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the right and power to
receive, endorse and collect all checks and other orders for the payment of
money made payable to such Pledgor representing any dividend, interest payment,
G-5
<PAGE>
principal payment or other distribution payable or distributable in respect of,
or otherwise constituting, the Collateral or any part thereof and to give full
discharge for the same.
8. Waiver by Pledgor. Each Pledgor waives (to the extent permitted by
applicable law) any right to require any Secured Party or any other obligee of
the Secured Obligations to (a) proceed against any other Pledgor or any Person,
including without limitation the Borrower or any Guarantor, (b) proceed against
or exhaust any Collateral or other collateral for the Secured Obligations, or
(c) pursue any other remedy in its power; and waives (to the extent permitted by
applicable law) any defense arising by reason of any disability or other defense
of any other Pledgor or any other Person, including without limitation the
Borrower or any Guarantor, or by reason of the cessation from any cause
whatsoever of the liability of any other Pledgor or any other Person, including
without limitation, the Borrower or any Guarantor. The Agent may at any time
deliver (without representation, recourse or warranty) the Collateral or any
part thereof to a Pledgor and the receipt thereof by such Pledgor shall be a
complete and full acquittance for the Collateral so delivered, and the Agent
shall thereafter be discharged from any liability or responsibility therefor.
9. Dividends and Voting Rights.
(a) All dividends and other distributions with respect to the Pledged
Securities shall be subject to the pledge hereunder, except for cash dividends
which are, to the extent permitted to be made under the Credit Agreement,
permitted to be retained by a Pledgor so long as no Event of Default shall have
occurred and be continuing, and any such dividends may be retained by such
Pledgor free from any Lien hereunder. Upon the occurrence and during the
continuance of any Event of Default, all such cash and other dividends shall be
promptly delivered to the Agent (together, if the Agent shall request, with
stock powers or instruments of assignment duly executed in blank affixed to any
stock certificate or other negotiable document or instrument so distributed) to
be held, released or disposed of by it hereunder or, at the option of the Agent,
to be applied to the Secured Obligations as they become due.
(b) So long as no Event of Default shall have occurred and be continuing,
the registration of the Collateral in the name of a Pledgor shall not be changed
and such Pledgor shall be entitled to exercise all voting and other rights and
powers pertaining to the Collateral for all purposes not inconsistent with the
terms hereof.
(c) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of a Pledgor to receive and
retain dividends and other distributions upon the Collateral shall cease and
shall thereupon be vested in the Agent for the benefit of the Lenders.
(d) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of a Pledgor to exercise the
voting or consensual rights and powers which it is authorized to exercise with
respect to the Collateral pursuant to subsection (b) above shall cease and the
Agent may thereupon (but shall not be obligated to), at its request, cause such
Collateral to be registered in the name of the Agent or its nominee or agent for
the benefit of the
G-6
<PAGE>
Lenders and exercise such voting or consensual rights and powers as appertain to
ownership of such Collateral, and to that end each Pledgor hereby appoints the
Agent as its proxy, with full power of substitution, to vote and exercise all
other rights as a shareholder with respect to the Pledged Securities hereunder
upon the occurrence and during the continuance of any Event of Default, which
proxy is coupled with an interest and is irrevocable prior to termination of
this Agreement as set forth in Section 22 hereof, and each Pledgor hereby agrees
to provide such further proxies as the Agent may request; provided, however,
that the Agent in its discretion may from time to time refrain from exercising,
and shall not be obligated to exercise, any such voting or consensual rights or
such proxy.
10. Power of Sale. Until the Facility Termination Date, the power of sale
and other rights, powers and remedies granted to the Agent for the benefit of
the Lenders hereunder shall continue to exist and may be exercised by the Agent
at any time and from time to time irrespective of the fact that any Secured
Obligations or any part thereof may have become barred by any statute of
limitations or that the liability of a Pledgor may have ceased.
11. Other Rights. The rights, powers and remedies given to the Agent for
the benefit of the Lenders by this Agreement shall be in addition to all rights,
powers and remedies given to any Lenders by virtue of any statute or rule of
law. Any forbearance or failure or delay by the Agent in exercising any right,
power or remedy hereunder shall not be deemed to be a waiver of such right,
power or remedy, and any single or partial exercise of any right, power or
remedy hereunder shall not preclude the further exercise thereof. Every right,
power and remedy of the Lenders shall continue in full force and effect until
such right, power or remedy is specifically waived by the Required Lenders by an
instrument in writing.
12. Anti-Marshalling Provisions. The right is hereby given by the Pledgor
to the Agent, for the benefit of the Secured Parties, to make releases (whether
in whole or in part) of all or any part of the Collateral agreeable to the Agent
without notice to, or the consent, approval or agreement of other parties and
interests, including junior lienors, which releases shall not impair in any
manner the validity of or priority of the Liens and security interests in the
remaining Collateral conferred under such documents, nor release any Pledgor
from its liability for the Secured Obligations hereby secured. Notwithstanding
the existence of any other security interest in the Collateral held by the
Agent, for the benefit of the Secured Parties, the Agent shall have the right to
determine the order in which any or all of the Collateral shall be subjected to
the remedies provided in this Agreement. The proceeds realized upon the exercise
of the remedies provided herein shall be applied by the Agent, for the benefit
of the Secured Parties, in the manner provided in Section 9.5 of the Credit
Agreement. Each Pledgor hereby waives any and all right to require the
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
13. Absolute Rights and Obligations. All rights of the Secured Parties,
and all obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement,
any other Loan Document or any other agreement or instrument relating to
any of the Secured Obligations;
G-7
<PAGE>
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Secured Obligations;
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Pledgor in respect of the
Secured Obligations or of this Agreement.
14. Definitions. All terms used herein unless otherwise defined in the
Credit Agreement shall be defined in accordance with the appropriate definitions
appearing in the Uniform Commercial Code as in effect in Virginia, and such
definitions are hereby incorporated herein by reference and made a part hereof.
15. Entire Agreement. This Agreement, together with the Credit Agreement,
the Guaranty and other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, inducements,
commitments or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
Neither this Agreement nor any portion or provision hereof may be changed,
altered, modified, supplemented, discharged, canceled, terminated, or amended
orally or in any manner other than by an agreement, in writing signed by the
parties hereto.
16. Further Assurances. Each Pledgor agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Agent may
at any time reasonably request in connection with the administration or
enforcement of this Agreement or related to the Collateral or any part thereof
or in order better to assure and confirm unto the Agent its rights, powers and
remedies for the benefit of the Lenders hereunder. Each Pledgor hereby consents
and agrees that the issuers of or obligors in respect of the Collateral shall be
entitled to accept the provisions hereof as conclusive evidence of the right of
the Agent, on behalf of the Lenders, to exercise its rights hereunder with
respect to the Collateral, notwithstanding any other notice or direction to the
contrary heretofore or hereafter given by such Pledgor or any other Person to
any of such issuers or obligors.
17. Binding Agreement; Assignment. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that, except as provided in the Credit Agreement, no Pledgor shall assign this
Agreement or any interest herein or in the Collateral, or any part thereof, or
otherwise pledge, encumber or grant any option with respect to the Collateral,
or any part thereof, or any cash or property held by the Agent as Collateral
under this Agreement. All references herein
G-8
<PAGE>
to the Agent shall include any successor thereof, each Lender and any other
obligees from time to time of the Secured Obligations.
18. Swap Agreements. All obligations of the Borrower under Swap Agreements
shall be deemed to be Secured Obligations secured hereby, and each Lender or
affiliate of a Lender party to any such Swap Agreement shall be deemed to be a
Secured Party hereunder.
19. Severability. In case any Lien, security interest or other right of
any Secured Party or any provision hereof shall be held to be invalid, illegal
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other Lien, security interest or other right granted hereby or
provision hereof.
20. Counterparts. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
21. Indemnification. Without limitation of Section 11.9 of the Credit
Agreement or any other indemnification provision in any Loan Document, each
Pledgor hereby covenants and agrees to pay, indemnify, and hold the Secured
Parties harmless from and against any and all other reasonable out-of-pocket
liabilities, costs, expenses or disbursements of any kind or nature whatsoever
arising in connection with any claim or litigation by any Person resulting from
the execution, delivery, enforcement, performance and administration of this
Agreement or the Loan Documents, or the transactions contemplated hereby or
thereby, or in any respect relating to the Collateral or any transaction
pursuant to which such Pledgor has incurred any Secured Obligation (all the
foregoing, collectively, the "indemnified liabilities"); provided, however, that
the Pledgor shall have no obligation hereunder with respect to indemnified
liabilities directly or primarily arising from the willful misconduct or gross
negligence of the Agent or any Lender. The agreements in this subsection shall
survive repayment of all Secured Obligations, termination or expiration of this
Agreement and occurrence of the Facility Termination Date.
22. Termination. This Agreement and all obligations of the Pledgor
hereunder shall terminate on the Facility Termination Date, at which time the
Liens and rights granted to the Agent for the benefit of the Lenders hereunder
shall automatically terminate and no longer be in effect, and the Collateral
shall automatically be released from the Liens created hereby. Upon such
termination of this Agreement, the Agent shall, at the sole expense of the
Pledgor, deliver to the Pledgor the certificates evidencing the Pledged
Securities (and any other property received as a dividend or distribution or
otherwise in respect of the Pledged Securities then in its custody), together
with any cash then constituting the Collateral, not then sold or otherwise
disposed of in accordance with the provisions hereof and take such further
actions as may be necessary to effect the same and as shall be reasonably
acceptable to the Agent.
23. Additional Shares. If any Pledgor shall acquire or hold (a) any
additional shares of capital stock of any Pledged Subsidiary or (b) any shares
of capital stock of any Subsidiary not listed on Schedule I hereto which are
required to be subject to a Pledge Agreement pursuant to the terms of Article
III, Section 7.19 or any other provision of the Credit Agreement or (c) any
additional
G-9
<PAGE>
Partnership Interests not listed on Schedule II hereto which are required to be
subject to a Pledge Agreement pursuant to the terms of Article III, Section 7.19
or any other provision of the Credit Agreement (any such shares or partnership
interests described in clauses (a), (b) or (c) above being referred to herein as
the "Additional Securities"), such Pledgor shall deliver to the Agent for the
benefit of the Lenders (i) a revised Schedule I and Schedule II hereto
reflecting the ownership and pledge of such Additional Securities and (ii) a
Stock Pledge Agreement Supplement in the form of Exhibit A hereto with respect
to such Additional Securities duly completed and signed by such Pledgor. Such
Pledgor shall comply with the requirements of this Section 23 concurrently with
the acquisition of any such Additional Securities in the case of shares
described in clause (a) above, and within the time period specified in Article
III or elsewhere in the Credit Agreement with respect to shares described in
clauses (b) and (c) above.
24. Remedies Cumulative. All remedies hereunder are cumulative and are not
exclusive of any other rights and remedies of the Agent provided by law or under
the Credit Agreement, the other Loan Documents, or other applicable agreements
or instruments. The making of the Loans to the Borrower pursuant to the Credit
Agreement shall be conclusively presumed to have been made or extended,
respectively, in reliance upon each Pledgor's pledge of the Pledged Securities
pursuant to the terms hereof.
25. Notices. Any notice required or permitted hereunder shall be given,
(a) with respect to the Pledgor, at the Borrower's address indicated in Section
11.2 of the Credit Agreement and (b) with respect to the Agent or a Lender, at
the Agent's address indicated in Section 11.2 of the Credit Agreement. All such
notices shall be given and shall be effective as provided in Section 11.2 of the
Credit Agreement.
26. Governing Law; Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED,
AND TO BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS EXECUTION AND
DELIVERY OUTSIDE SUCH STATE.
(b) EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED
IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF MONTGOMERY, STATE
OF MARYLAND, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH PLEDGOR EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND EACH PLEDGOR HEREBY
G-10
<PAGE>
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED
IN SECTION 11.2 OF THE CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF MARYLAND.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) or (c) HEREOF SHALL
PRECLUDE ANY SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY
JURISDICTION WHERE ANY PLEDGOR OR ANY OF SUCH PLEDGOR'S PROPERTY OR ASSETS
MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF
ANY SUCH JURISDICTION, EACH PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY
SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION
OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, EACH PLEDGOR AND THE AGENT ON BEHALF OF THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
[Signature page follows.]
G-11
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Stock Pledge
Agreement on the day and year first written above.
PLEDGOR:
[ insert name of Pledgor ]
WITNESS:
By:___________________________________
_____________________ Name:_________________________________
Title:________________________________
_____________________
AGENT:
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
WITNESS:
By:___________________________________
_____________________ Name:_________________________________
Title:________________________________
_____________________
STOCK PLEDGE AGREEMENT
SIGNATURE PAGE 1 OF 1
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
No. of No. of Shares No. of Shares No. of Certificate Nos.
Name of Issuer Class of Stock Shares Authorized Issued Outstanding Shares Pledged for Pledged Shares
- -------------- -------------- ----------------- ------ ----------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Class or Type of Partnership Partnership Interests
Name of Partnership Interests Outstanding Partnership Interests Pledged
- ------------------- ---------------------------- --------------------- -----------------------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT A
STOCK PLEDGE AGREEMENT SUPPLEMENT
THIS STOCK PLEDGE AGREEMENT SUPPLEMENT (this " Supplement"), dated as of
______________, 199____ is made by and between [INSERT PLEDGOR] (the "Pledgor"),
and NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized
and existing under the laws of the United States, as Agent (the "Agent") for
each of the financial institutions (the "Lenders") now or hereafter party to the
Credit Agreement dated as of April 9, 1998 among such Lenders, the Agent,
CulturalAccessWorldwide, Inc. Inc. (the "Borrower"). All capitalized terms used
but not otherwise defined herein shall have the respective meanings assigned
thereto in the Stock Pledge Agreement (as defined below).
WHEREAS, the Pledgor is a party to that certain Stock Pledge Agreement
dated as of ____________, ____ by the Pledgor and certain affiliates of the
Pledgor in favor of the Agent for the benefit of the Lenders (the "Stock Pledge
Agreement"); and
WHEREAS, the Pledgor is required under the terms of the Credit Agreement
and the Stock Pledge Agreement to cause certain shares of capital stock and
certain partnership interests held by it and listed on Annex A to this
Supplement (the "Additional Securities") to become subject to the Stock Pledge
Agreement; and
WHEREAS, a material part of the consideration given in connection with and
as an inducement to the execution and delivery of the Credit Agreement by the
Agent and the Lenders was the obligation of the Pledgor to pledge to the Agent
for the benefit of the Lenders the Additional Securities, whether then owned and
not required to be subject to a pledge or subsequently acquired or created; and
WHEREAS, the Agent and the Lenders have required the Pledgor to pledge to
the Agent for the benefit of the Lenders all of the Additional Securities in
accordance with the terms of the Credit Agreement and the Stock Pledge
Agreement;
NOW, THEREFORE, the Pledgor hereby agrees as follows with the Agent, for
the benefit of the Lenders:
1. The Pledgor hereby reaffirms and acknowledges the pledge and collateral
assignment to, and the grant of security interest in, the Additional Securities
contained in the Stock Pledge Agreement and pledges and collaterally assigns to
the Agent for the benefit of the Lenders, and grants to the Agent for the
benefit of the Lenders a first priority lien and security interest in, the
Additional Securities and all of the following:
<PAGE>
(e) all cash, securities, dividends, rights, and other property at
any time and from time to time declared or distributed in respect of or in
exchange for any or all of the Additional Securities, other than cash
dividends permitted to be retained by the Pledgor under Section 9 of the
Pledge Agreement;
(f) all other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such property and all cash,
securities, interest, dividends, rights, and other property at any time
and from time to time declared or distributed in respect of or in exchange
for any or all of the Additional Securities; and
(g) all proceeds of any of the foregoing.
The Pledgor hereby acknowledges, agrees and confirms that, by its execution of
this Supplement, the Additional Securities constitute "Pledged Securities" under
and are subject to the Pledge Agreement. Each of the representations and
warranties with respect to Pledged Securities contained in the Pledge Agreement
is hereby made by the Pledgor with respect to the Additional Securities. A
revised Schedule I and Schedule II to the Pledge Agreement reflecting the
Additional Securities and all other Pledged Securities, together with stock
certificates representing the Additional Securities with stock powers or powers
of assignment duly executed in blank by the Pledgor, have been delivered
herewith to the Agent.
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly
executed by its authorized officer as of the day and year first above written.
________________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
Acknowledged and accepted:
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
ANNEX A
Additional Securities
<TABLE>
<CAPTION>
Name of Class of Stock or Total Number of Certificate Numbers
Issuer or Partnership Partnership Interests Shares or -------------------
- --------------------- --------------------- Partnership Interests
Pledged
----------------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT H
Form of Opinion of Borrower's Counsel
_______, 1998
NationsBank, National Association,
as Agent and
Each of the Lenders Party to the
Credit Agreement Referenced Below
NationsBank Corporate Center
Charlotte, North Carolina 28255-0065
Re: $30,000,000 Revolving Credit Facility among
NationsBank, National Association, as Agent,
the Lenders party thereto and CulturalAccessWorldwide, Inc.
Ladies and Gentlemen:
We have acted as counsel to CulturalAccessWorldwide, Inc., a Delaware
corporation (the "Borrower"), and the Guarantors in connection with the Loan in
the amount of $30,000,000 (the "Revolving Loan") being made available to the
Borrower by you on this date pursuant to the Credit Agreement of even date
herewith among you, the Lenders and the Borrower (the "Credit Agreement"), and
the other transactions contemplated under the Credit Agreement.
This opinion is being delivered in accordance with the conditions set
forth in Section 5.1 of the Credit Agreement. All capitalized terms not
otherwise defined herein shall have the meanings provided therefor in the Credit
Agreement.
As such counsel, we have reviewed the following documents:
1. the Credit Agreement;
2. the Note;
3. the Facility Guaranty;
4. the following Security Instruments: the Pledge Agreement, the
Security Agreement and the Intellectual Property Security Agreement;
and
<PAGE>
5. the Financing Statements (as hereinafter defined).
The documents described in items 1 through 5 immediately above are
referred to herein as the "Loan Documents".
For purposes of the opinions expressed below, we have assumed that all
natural persons executing the Loan Documents have legal capacity to do so; that
all signatures (other than those of representatives of the Borrower and the
Guarantors on the Loan Documents) on all documents submitted to us are genuine;
that all documents submitted to us as originals (other than the Loan Documents)
are authentic; and that all documents submitted to us as certified copies or
photocopies conform to the originals of such documents, which themselves are
authentic.
In addition, for purposes of giving this opinion, we have examined such
corporate records of the Borrower and the Guarantors, certificates of public
officials, certificates of appropriate officials of the Borrower and the
Guarantors, and such other documents, and have made such inquiries as we have
deemed appropriate.
Based upon and subject to the foregoing, it is our opinion that:
1. The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation and is duly qualified
to transact business as a foreign corporation and is in good standing in the
Commonwealth of Virginia and in all other jurisdictions in which the nature of
its business requires such qualification. The Borrower has full corporate power
and authority to own its assets and conduct the businesses in which it is now
engaged and as are expressly contemplated by the Loan Documents, and has full
corporate power and authority to enter into each of the Loan Documents to which
it is a party and to perform its obligations thereunder.
2. Each of the Loan Documents to which the Borrower is a party has been
duly authorized by the Board of Directors of the Borrower (and by any required
shareholder action), has been duly executed and delivered by the Borrower, and
constitutes the legal, valid and binding obligation, agreement, instrument or
conveyance, as the case may be, of the Borrower, enforceable against the
Borrower in accordance with its respective terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization and
other similar laws relating to or affecting creditors' rights generally and by
the application of general equitable principles (whether considered in
proceedings at law or in equity).
3. Each Credit Party (other than the Borrower) is a corporation or
partnership, as the case may be, duly organized, validly existing and in good
standing under the laws of its respective state of its formation and is duly
qualified to transact business as a foreign entity and is in good standing in
all jurisdictions in which the nature of its business requires such
qualification. Each Credit Party (other than the Borrower) has full corporate
power and authority to own its assets and conduct the businesses in which it is
now engaged and as expressly contemplated in the Loan
<PAGE>
Documents, and has full corporate power and authority to enter into each of the
Loan Documents to which it is a party and to perform its obligations thereunder.
4. Each of the Loan Documents to which each Credit Party (other than the
Borrower) is a party has been duly authorized by the Board of Directors of such
Credit Party (and by any required shareholder action), has been duly executed
and delivered by such Credit Party, and con stitutes the legal, valid and
binding obligation, agreement or instrument, as the case may be, of such Credit
Party, enforceable against such Credit Party in accordance with its respective
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization and other similar laws relating to or
affecting creditors' rights generally and by the application of general
equitable principles (whether considered in proceedings at law or in equity).
5. Neither the execution or delivery of, nor performance by the Borrower
or any other Credit Party of its obligations under, the Loan Documents (a) does
or will conflict with, violate or constitute a breach of (i) the charter,
partnership agreement or bylaws of the Borrower or any other Credit Party, (ii)
any laws, rules or regulations applicable to the Borrower or any other Credit
Party, or (iii) any contract, agreement, indenture, lease, instrument, other
document, judgment, writ, determination, order, decree or arbitral award to
which the Borrower or any Subsidiary is a party or by which the Borrower or any
Subsidiary or any other Credit Party or any of their properties is bound, (b)
requires the prior consent of, notice to, license from or filing with any
Governmental Authority which has not been duly obtained or made on or prior to
the date hereof, or (c) does or will result in the creation or imposition of any
lien, pledge, charge or encumbrance of any nature upon or with respect to any of
the properties of the Borrower or any Subsidiary or any other Credit Party,
except for the Liens in your favor expressly created pursuant to the Loan
Documents.
6. There is no pending or, to the best of our knowledge, threatened,
action, suit, investigation or proceeding (including, without limitation, any
action, suit, investigation, or proceeding under any environmental or labor
law), nor is there any basis therefor, before or by any court, or governmental
department, commission, board, bureau, instrumentality, agency or arbitral
authority, (i) which calls into question the validity or enforceability of any
of the Loan Documents, or the titles to their respective offices or authority of
any officers of the Borrower or any other Credit Party or (ii) an adverse result
in which would reasonably be likely to have a Material Adverse Effect.
7. Neither the Borrower nor any Subsidiary nor any other Credit Party is
subject to any charter, bylaw or other corporate or partnership restrictions
nor, to the best of our knowledge, is the Borrower or any Subsidiary or any
other Credit Party to or bound by any contract or agreement which (i) materially
and adversely affects its business, properties or condition (financial or
otherwise), or (ii) restricts, limits, or prohibits performance of any of their
respective obligations pursuant to the terms of the Loan Documents.
8. To the best of our knowledge after due inquiry, neither the Borrower
nor any Subsidiary nor any other Credit Party (i) is in default (which default
has not been waived) under any agreement, document or instrument to which it is
a party or by which it or any of its assets is bound or (ii) is in violation of
any law, rule, regulation, judgment, writ, determination, order, decree or
<PAGE>
arbitral award to which the Borrower or any Subsidiary or any other Credit Party
is a party or by which the Borrower or any Subsidiary or any other Credit Party
or any of their respective properties is bound, which default or violation, as
the case may be, would constitute a Default or Event of Default under the Credit
Agreement or otherwise could reasonably be likely to have a Material Adverse
Effect.
9. None of the transactions contemplated by the Credit Agreement,
including, without limitation, the use of the proceeds of the Loans provided for
in the Loan Documents, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, any regula tions issued pursuant
thereto, or regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
10. Once value has been given to the Borrower by the Lenders and assuming
the Agent, for the benefit of the Lenders, has taken possession of the
certificates representing all of the Pledged Stock and Partnership Interests, as
more fully described in Schedule A hereto, and the stock powers related thereto,
for value in good faith and without notice of an adverse claim, so long as the
Agent, for the benefit of the Lenders, maintains continuous and uninterrupted
possession of the certificates representing the Pledged Stock and Partnership
Interests, the Pledge Agreement will create a valid and perfected security
interest in favor of the Agent, for the benefit of the Lenders, in the Pledged
Stock and Partnership Interests, subject to no other security interest, lien,
encumbrance or adverse claim (other than restrictions on transfer imposed by
applicable securities laws) and no filings or recordations are necessary to
perfect the security interests created by the Pledge Agreement in the Pledged
Stock and Partnership Interests. Such security interest will have priority over
any other consensual security interests in the Pledged Stock and Partnership
Interests.
11. All of the shares of Pledged Stock and all the Partnership Interests
are duly authorized, validly issued, fully paid and nonassessable, and free of
any preemptive rights. The Certificates listed on Schedule A hereto are now the
sole evidence of the shares of Pledged Stock and Partnership Interests and have
been duly delivered to you with an appropriate stock power and/or assignment
sufficient to permit the sale or transfer of the shares of Pledged Stock and
Partnership Interest by you in accordance with the terms of the Pledge
Agreement, subject to applicable federal and state securities law.
12. Each of the Security Agreement and the Intellectual Property Security
Agreement is effective to create a valid security interest in favor of the Agent
for the benefit of the Lenders in the Collateral described therein. The Uniform
Commercial Code Financing Statements on Form UCC-1 described on Schedule A
attached hereto (collectively, the "Financing Statements") have been duly
executed and delivered to the Agent and are in form, number and content
sufficient (together with the tender of necessary filing fees) for filing with
the respective filing offices described on Schedule A with the effect that, upon
such filing, the Agent shall have a duly perfected security interest in the
Collateral described in the Security Agreement and the Intellectual Property
Security Agreement, to the extent that a security interest in such Collateral
can be perfected by the filing of financing statements under the Uniform
Commercial Code as in effect in the appropriate jurisdictions.
<PAGE>
Our opinions contained herein are rendered solely in connection with the
transactions contemplated under the Loan Documents and may not be relied upon in
any manner by any Person other than the addressees hereof, any successor or
assignee of any addressee (including successive assignees) and any Person who
shall acquire a participation interest in the interest of any Lender
(collectively, the "Reliance Parties"), or by any Reliance Party for any other
purpose. Our opinions herein shall not be quoted or otherwise included,
summarized or referred to in any publication or document, in whole or in part,
for any purposes whatsoever, or furnished to any Person other than a Reliance
Party (or a Person considering whether to become a Reliance Party), except as
may be required of any Reliance Party by applicable law or regulation or in
accordance with any auditing or oversight function or request of regulatory
agencies to which a Reliance Party is subject.
Very truly yours,
<PAGE>
SCHEDULE A to Opinion
Pledged Stock; Partnership Interests; Financing Statements
<PAGE>
EXHIBIT I
Compliance Certificate
NationsBank, National Association,
as Agent
_______________________________
_______________________________
_______________________________
Attention:_____________________
Telefacsimile:_________________
NationsBank, National Association,
as Agent
_______________________________
_______________________________
Attention: ____________________
Telefacsimile: (___) ___-____
Reference is hereby made to the Credit Agreement dated as of April 9, 1998
(the "Agreement") among CulturalAccessWorldwide, Inc., a Delaware corporation
(the "Borrower"), the Lenders (as defined in the Agreement) and NationsBank,
National Association, as Agent for the Lenders ("Agent"). Capitalized terms used
but not otherwise defined herein shall have the respective meanings therefor set
forth in the Agreement. The undersigned, a duly authorized and acting Authorized
Representative, hereby certifies to you as of __________ (the "Determination
Date") as follows:
1. Calculations:
<TABLE>
<S> <C>
A. Compliance with Section 8.1(a): Consolidated Net Worth
1. Required Consolidated Net Worth
at the last day of the most recent fiscal quarter $____________
2. Consolidated Net Income x 0.75 $____________
3. 100% of the aggregate amount of all increases in the stated
capital and additional paid-in capital accounts of the
Borrower resulting from the issuance of equity securities or
other capital investments $____________
4. Sum of A.1 + A.2 + A.3 $____________
5. Actual Consolidated Net Worth $____________
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
Required A.5 must not be less than A.4
B. Compliance with Section 9.1(b): Consolidated Adjusted Leverage Ratio.
1. Consolidated Net Income (for the Two-Quarter
Period ending on the Determination Date) $____________
2. Consolidated Interest Expense (for the Two-Quarter
Period ending on the Determination Date) $____________
3. Taxes on income (for the Two-Quarter Period
ending on the Determination Date) $____________
4. Depreciation (for the Two-Quarter Period ending
on the Determination Date) $____________
5. Amortization (for the Two-Quarter Period ending
on the Determination Date) $____________
6. Consolidated EBITDA $____________
(B.1+B.2+B.3+B.4+B.5)
7. Adjustment for projected reductions in owner's
and/or management compensation
(not to exceed $500,000) $____________
8. Consolidated Adjusted EBITDA $____________
(B.6-B.7)
9. Consolidated Indebtedness $____________
10. Consolidated Adjusted Leverage Ratio _____ to 1.0
(B.9 / (2 x B.8))
Required: B.10 must not be greater than 3.5 to 1.0
C. Compliance with Section 9.1(c): Consolidated Fixed Charge Ratio
1. Consolidated EBITDA (for the Two-Quarter
Period ending on the Determination Date) $____________
2. Consolidated Lease Payments (for the Two-Quarter
Period Ending on the Determination Date) $____________
3. Capital Expenditures (for the Two-Quarter
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
Period ending on the Determination Date) $____________
4. Restricted Payments (for the Two-Quarter
Period ending on the Determination Date) $____________
5. Consolidated Interest Expense $____________
6. Current Maturities of Consolidated Indebtedness $____________
7. Income taxes accrued $____________
8. Consolidated Lease Payments $____________
9. Restricted Payments $____________
10. Consolidated Fixed Charges $____________
(C.5 + C.6 + C.7 + C.8 + C.9)
11. Consolidated Fixed Charge Ratio _______ to 1.00
((C.1 + C.2 - C.3-C.4) / C.10)
Required: C.11 must not be less than 1.25 to 1.00
D. Compliance with Section 9.1(d): Consolidated Senior
Funded Debt to Adjusted EBITDA Ratio
1. Consolidated Indebtedness $____________
2. Subordinated Indebtedness $____________
3. Consolidated Senior Funded Debt $____________
(D.1 - D.2)
4. Consolidated Adjusted EBITDA (for the
Two-Quarter Period ending on the
Determination Date) $____________
5. Consolidated Senior Funded Debt to
Adjusted EBITDA Ratio ______ to 1.00
(D.3 / (2 x D.4))
Required: D.5 must not exceed 3.00 to 1.00
E. Compliance with Section 9.1(e): Consolidated Interest Coverage Ratio
</TABLE>
I-3
<PAGE>
<TABLE>
<S> <C>
1. Consolidated EBITDA (for the Four-Quarter
Period ending on the Determination Date) $____________
2. Consolidated Interest Expense (for the
Four-Quarter Period ending on the
Determination Date) $____________
3. Consolidated Interest Coverage Ratio ______ to 1.00
(E.1 / E.2)
Required: E.3 must not be less than 3.00 to 1.00
</TABLE>
2. Since __________ (the date of the last similar certification) the Borrower
or its Subsidiaries have or have not (circle one) acquired any new
patents, trademarks, copyrights or license agreements requiring an
amendment to a Schedule to the Intellectual Property Security Agreement.
If answer is positive, attach new Schedule.
3. No Default
A. Since ___________ (the date of the last similar certification), (a)
the Borrower has not defaulted in the keeping, observance,
performance of fulfillment of its obligations pursuant to any of the
Loan Documents; and (b) no Default or Event of Default specified in
Article IX of the Agreement has occurred and is continuing.
B. If a Default or Event of Default has occurred since _______ (the
date of the last similar certification), the Borrower proposes to
take the following action with respect to such Default or Event of
Default: ______________________________________.
(Note, if no Default or Event of Default has occurred, insert "Not
Applicable").
The Determination Date is the date of the last required financial
statements submitted to the Lenders in accordance with Section 7.1 of the
Agreement.
IN WITNESS WHEREOF, I have executed this Certificate this ___ day of
_________, 1998.
By: _____________________________________
Authorized Representative
Name: ____________________________________
Title:____________________________________
<PAGE>
EXHIBIT J
Form of Facility Guaranty
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty Agreement" or this "Guaranty"),
dated as of __________, ____, is made by THE UNDERSIGNED (the "Guarantor") to
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States, as Agent (the "Agent") for each of
the lenders (the "Lenders" and collectively with the Agent the "Secured
Parties") now or hereafter party to the Credit Agreement (as defined below). All
capitalized terms used but not otherwise defined herein shall have the meaning
ascribed to such terms in the Credit Agreement
W I T N E S S E T H:
WHEREAS, the Secured Parties have provided to CULTURALACCESSWORLDWIDE,
INC. (the "Borrower") a revolving credit facility pursuant to the Credit
Agreement dated as of April 9, 1998 among the Borrower, the Agent and the
Lenders (as from time to time amended, revised, modified, supplemented or
amended and restated, the "Credit Agreement"); and
WHEREAS, the Guarantor is a new Subsidiary of the Borrower and is
therefore required to enter into this Guaranty pursuant to Section 7.19 of the
Credit Agreement; and
WHEREAS, as a condition to entering into the Credit Agreement and making
and continuing to make any loans or advances thereunder, the Guarantor is
required to guarantee to the Secured Parties payment of the Borrower's
Obligations in accordance with the terms of this Agreement; and
WHEREAS, the Guarantor will materially benefit from the loans and advances
made under the Credit Agreement, and the Guarantor is willing to enter into this
Guaranty to provide an inducement for the Secured Parties to continue to make
loans and advances under the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Guarantor hereby agrees as follows:
1. Guaranty. The Guarantor hereby unconditionally, absolutely, continually
and irrevocably guarantees to the Secured Parties the payment and performance in
full of the Borrower's Liabilities (as defined below). For all purposes of this
Guaranty Agreement, "Borrower's Liabilities" means: (a) the Borrower's prompt
payment in full, when due or declared due and at all such times, of all
Obligations and all other amounts pursuant to the terms of the Credit Agreement,
the Notes,
<PAGE>
and all other Loan Documents executed in connection with the Credit Agreement
and all Rate Hedging Obligations heretofore, now or at any time or times
hereafter owing, arising, due or payable from the Borrower to the Lenders,
including without limitation principal, interest, premium or fee (including, but
not limited to, loan fees and attorneys' fees and expenses); and (b) the
Borrower's prompt, full and faithful performance, observance and discharge of
each and every agreement, undertaking, covenant and provision to be performed,
observed or discharged by the Borrower under the Credit Agreement and all other
Loan Documents executed in connection therewith and all Swap Agreements. The
Guarantor's obligations to the Secured Parties under this Guaranty Agreement are
hereinafter collectively referred to as the "Guarantors' Obligations"; provided,
however, that the liability of the Guarantor individually with respect to the
Guarantors' Obligations shall be limited to an aggregate amount equal to the
largest amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the United States Bankruptcy Code or any
comparable provisions of any applicable state law.
The Guarantor agrees that it is directly and primarily liable for the
Borrower's Liabilities.
2. Payment. If the Borrower shall default in payment or performance of any
Borrower's Liabilities, whether principal, interest, premium, fee (including,
but not limited to, loan fees and attorneys' fees and expenses), or otherwise,
when and as the same shall become due, whether according to the terms of the
Credit Agreement, by acceleration, or otherwise, or upon the occurrence of any
Event of Default under the Credit Agreement that has not been cured or waived,
then the Guarantor will, upon demand thereof by the Agent or its successors or
assigns AS OF THE DATE OF SUCH DEMAND, fully pay to the Agent, for the benefit
of the Secured Parties, subject to any restriction set forth in Section 1
hereof, an amount equal to all of Guarantors' Obligations then due and owing.
3. Unconditional Obligations. This is a guaranty of payment and not of
collection. The Guarantors' Obligations under this Guaranty Agreement shall be
joint and several, absolute and unconditional irrespective of the validity,
legality or enforceability of the Credit Agreement, the Notes or any other Loan
Document or any other guaranty of the Borrower's Liabilities, and shall not be
affected by any action taken under the Credit Agreement, the Notes or any other
Loan Document, any other guaranty of the Borrower's Liabilities, or any other
agreement between the Secured Parties and the Borrower or any other Person, in
the exercise of any right or power therein conferred, or by any failure or
omission to enforce any right conferred thereby, or by any waiver of any
covenant or condition therein provided, or by any acceleration of the maturity
of any of the Borrower's Liabilities, or by the release or other disposal of any
security for any of the Borrower's Liabilities, or by the dissolution of the
Borrower or the combination or consolidation of the Borrower into or with
another entity or any transfer or disposition of any assets of the Borrower or
by any extension or renewal of the Credit Agreement, any of the Notes or any
other Loan Document, in whole or in part, or by any modification, alteration,
amendment or addition of or to the Credit Agreement, any of the Notes or any
other Loan Document, any other guaranty of the Borrower's Liabilities, or any
other agreement between the Secured Parties and the Borrower or any other
Person, or by any other circumstance whatsoever (with or without notice to or
knowledge of any Guarantor) which may or might in any manner or to any extent
vary the risks of the Guarantor, or might otherwise constitute
<PAGE>
a legal or equitable discharge of a surety or a guarantor; it being the purpose
and intent of the parties hereto that this Guaranty Agreement and the
Guarantors' Obligations hereunder shall be absolute and unconditional under any
and all circumstances and shall not be discharged except by payment as herein
provided.
4. Currency and Funds of Payment. The Guarantor hereby guarantees that the
Guarantors' Obligations will be paid in lawful currency of the United States of
America and in immediately available funds, regardless of any law, regulation or
decree now or hereafter in effect that might in any manner affect the Borrower's
Liabilities, or the rights of the Secured Parties with respect thereto as
against the Borrower, or cause or permit to be invoked any alteration in the
time, amount or manner of payment by the Borrower of any or all of the
Borrower's Liabilities.
5. Suits. The Guarantor from time to time shall pay to the Agent for the
benefit of the Secured Parties, on demand, at the Agent's place of business set
forth in the Credit Agreement or such other address as the Agent shall give
notice of to the Guarantor, the Guarantors' Obligations as they become or are
declared due, and in the event such payment is not made forthwith, the Agent or
the Lenders or any of them may proceed to suit against any one or more or all of
the Guarantors. At the Agent's election, one or more and successive or
concurrent suits may be brought hereon by the Agent against any one or more or
all of the Guarantors, whether or not suit has been commenced against the
Borrower, any other guarantor of the Borrower's Liabilities, or any other Person
and whether or not the Secured Parties have taken or failed to take any other
action to collect all or any portion of the Borrower's Liabilities or have taken
or failed to take any actions against any collateral securing payment or
performance of all or any portion of the Borrower's Liabilities.
6. Set-Off and Waiver. The Guarantor waives any right to assert against
the Secured Parties as a defense, counterclaim, set-off or cross claim, any
defense (legal or equitable) or other claim which the Guarantor may now or at
any time hereafter have against the Borrower or the Secured Parties without
waiving any additional defenses, set-offs, counterclaims or other claims
otherwise available to the Guarantor. If at any time hereafter the Secured Party
employs counsel for advice or other representation to enforce the Guarantors'
Obligations that arise out of an Event of Default, then, in any of the foregoing
events, all of the reasonable attorneys' fees arising from such services and all
expenses, costs and charges in any way or respect arising in connection
therewith or relating thereto shall be paid by the Guarantor to the Agent, for
the benefit of the Secured Parties, on demand.
7. Waiver; Subrogation.
(a) The Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's acceptance of this Guaranty Agreement; (ii)
the Lenders' heretofore, now or from time to time hereafter making Loans
and otherwise loaning monies or giving or extending credit to or for the
benefit of the Borrower, whether pursuant to the Credit Agreement or the
Notes or any other Loan Document or any amendments, modifications, or
supplements thereto, or replacements or extensions thereof; (iii) the
Secured Parties or the Borrower heretofore, now or at any time hereafter,
obtaining, amending, substituting for,
<PAGE>
releasing, waiving or modifying the Credit Agreement, the Notes or any
other Loan Documents; (iv) presentment, demand, default, non-payment,
partial payment and protest; (v) any Secured Party heretofore, now or at
any time hereafter granting to the Borrower (or any other party liable to
the Lenders on account of the Borrower's Liabilities) or to any certain
Guarantor any indulgence or extensions of time of payment of the
Borrower's Liabilities or Guarantors' Obligations, respectively; and (vi)
any Secured Party heretofore, now or at any time hereafter accepting from
the Borrower, any other Guarantor, any other guarantor of the Borrower's
Liabilities or any other Person, any partial payment or payments on
account of the Borrower's Liabilities or any collateral securing the
payment thereof or the Agent settling, subordinating, compromising,
discharging or releasing the same. The Guarantor agrees that each Secured
Party may heretofore, now or at any time hereafter do any or all of the
foregoing in such manner, upon such terms and at such times as each
Secured Party, in its sole and absolute discretion, deems advisable,
without in any way or respect impairing, affecting, reducing or releasing
the Guarantor from the Guarantors' Obligations, and the Guarantor hereby
consents to each and all of the foregoing events or occurrences.
(b) The Guarantor hereby agrees that payment or performance by the
Guarantor of the Guarantors' Obligations under this Guaranty Agreement may
be enforced by the Agent on behalf of the Lenders upon demand by the Agent
to the Guarantor without the Agent being required, the Guarantor expressly
waiving any right it may have to require the Agent, to (i) prosecute
collection or seek to enforce or resort to any remedies against the
Borrower or any other Guarantor or any other guarantor of the Borrower's
Liabilities, or (ii) seek to enforce or resort to any remedies with
respect to any security interests, Liens or encumbrances granted to the
Agent by the Borrower, any other Guarantor or any other Person on account
of the Borrower's Liabilities or any guaranty thereof, IT BEING EXPRESSLY
UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY THE GUARANTOR THAT DEMAND UNDER
THIS GUARANTY AGREEMENT MAY BE MADE BY THE AGENT, AND THE PROVISIONS
HEREOF ENFORCED BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF
DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT. Neither the
Agent nor any Lender shall have any obligation to protect, secure or
insure any of the foregoing security interests, Liens or encumbrances on
the properties or interests in properties subject thereto. The Guarantors'
Obligations shall in no way be impaired, affected, reduced, or released by
reason of any Secured Party's failure or delay to do or take any of the
acts, actions or things described in this Guaranty including, without
limiting the generality of the foregoing, those acts, actions and things
described in this Section 7.
(c) The Guarantor further agrees with respect to this Guaranty that
such Guarantor shall have no right of subrogation, reimbursement or
indemnity, nor any right of recourse to security for the Borrower's
Liabilities until the Facility Termination Date.
8. Effectiveness; Enforceability. This Guaranty Agreement shall be
effective as of the date of the initial Advance under the Credit Agreement and
shall continue in full force and effect
<PAGE>
until the Facility Termination Date. This Guaranty Agreement shall be binding
upon and inure to the benefit of the Guarantor, the Agent and the Lenders and
their respective successors and assigns. Notwithstanding the foregoing, no
Guarantor may, except as provided in the Credit Agreement, without the prior
written consent of the Agent, assign any rights, powers, duties or obligations
hereunder. Any claim or claims that the Secured Parties may at any time
hereafter have against a Guarantor under this Guaranty Agreement may be asserted
by any Secured Party by written notice directed to the Guarantor.
9. Representations and Warranties. The Guarantor warrants and represents
to the Agent for the benefit of the Lenders that it is duly authorized to
execute, deliver and perform this Guaranty Agreement, that this Guaranty
Agreement is legal, valid, binding and enforceable against the Guarantor in
accordance with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles; and that the
Guarantor's execution, delivery and performance of this Guaranty Agreement do
not violate or constitute a breach of its certificate of incorporation or other
documents of corporate governance or any material agreement to which the
Guarantor is a party, or any applicable laws, orders, regulations, decrees or
awards of any applicable governmental authority or arbitral body.
10. Expenses. The Guarantor agrees to be liable for the payment of all
reasonable fees and expenses, including attorney's fees, incurred by the Agent
in connection with the enforcement of this Guaranty Agreement.
11. Reinstatement. The Guarantor agrees that this Guaranty Agreement shall
continue to be effective or be reinstated, as the case may be, at any time
payment received by the Agent under the Credit Agreement or this Guaranty
Agreement is rescinded or must be restored for any reason.
12. Attorney-in-Fact. The Guarantor hereby appoints the Agent as the
Guarantor's attorney-in-fact for the purposes of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is coupled with an interest and is irrevocable; provided, that the
Agent shall have and may exercise rights under this power of attorney only upon
the occurrence and during the continuance of an Event of Default.
13. Absolute Rights and Obligations. All rights of the Secured Parties,
and all obligations of the Guarantor hereunder, shall be absolute and
unconditional irrespective of:
(1) any lack of validity or enforceability of the Credit Agreement,
any other Loan Document or any other agreement or instrument relating to
any of the Guarantors' Obligations;
(2) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guarantors' Obligations, or any other
amendment or waiver of or any
<PAGE>
consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the
Guarantors' Obligations;
(3) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Guarantors' Obligations; or
(4) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Guarantor in respect of the
Guarantors' Obligations or of this Agreement.
14. Reliance. The Guarantor represents and warrants to the Agent, for the
benefit of the Secured Parties, that: (a) the Guarantor has adequate means to
obtain from Borrower, on a continuing basis, information concerning Borrower and
Borrower's financial condition and affairs and has full and complete access to
Borrower's books and records; (b) the Guarantor is not relying on any Secured
Party, its or their employees, agents or other representatives, to provide such
information, now or in the future; (c) the Guarantor is executing this Guaranty
Agreement freely and deliberately, and understands the obligations and financial
risk undertaken by providing this Guaranty; (d) the Guarantor has relied solely
on the Guarantor's own independent investigation, appraisal and analysis of
Borrower and Borrower's financial condition and affairs in deciding to provide
this Guaranty and is fully aware of the same; and (e) the Guarantor has not
depended or relied on any Secured Party, its or their employees, agents or
representatives, for any information whatsoever concerning Borrower or
Borrower's financial condition and affairs or other matters material to the
Guarantor's decision to provide this Guaranty or for any counseling, guidance,
or special consideration or any promise therefor with respect to such decision.
The Guarantor agrees that neither the Agent nor any Lender has any duty or
responsibility whatsoever, now or in the future, to provide to the Guarantor any
information concerning Borrower or Borrower's financial condition and affairs,
other than as expressly provided herein, and that, if the Guarantor receives any
such information from the Agent or any Lender, its or their employees, agents or
other representatives, the Guarantor will independently verify the information
and will not rely on the Agent or any Lender, its or their employees, agents or
other representatives, with respect to such information.
15. Definitions. All terms used herein shall be defined in accordance with
the appropriate definitions appearing in the Uniform Commercial Code as in
effect in Maryland, and such definitions are hereby incorporated herein by
reference and made a part hereof.
16. Entire Agreement. This Guaranty Agreement, together with the Credit
Agreement and other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, inducements,
commitments or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
Neither this Guaranty Agreement nor any portion or provision hereof may be
changed, altered, modified, supplemented, discharged,
<PAGE>
canceled, terminated, or amended orally or in any manner other than by an
agreement, in writing signed by the parties hereto.
17. Binding Agreement; Assignment. This Guaranty Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that no Guarantor shall be permitted to assign this Agreement or any interest
herein, except as permitted in the Credit Agreement. All references herein to
the Agent shall include any successor thereof, each Lender and any other
obligees from time to time of the Guarantors' Obligations.
18. Swap Agreements. All obligations of the Borrower under Swap Agreements
shall be deemed to be Secured Obligations secured hereby, and each Lender or
affiliate of a Lender party to any such Swap Agreement shall be deemed to be a
Secured Party hereunder.
19. Severability. In case any Lien, security interest or other right of
any Secured Party or any provision hereof shall be held to be invalid, illegal
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other Lien, security interest or other right granted hereby or
provision hereof.
20. Counterparts. This Guaranty Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
21. Indemnification. Without limitation of Section 11.9 of the Credit
Agreement or any other indemnification provision in any Loan Document, the
Guarantor hereby covenants and agrees to pay, indemnify, and hold the Secured
Parties harmless from and against any and all other reasonable out-of-pocket
liabilities, costs, expenses or disbursements of any kind or nature whatsoever
arising in connection with any claim or litigation by any Person resulting from
the execution, delivery, enforcement, performance and administration of this
Guaranty Agreement or the Loan Documents, or the transactions contemplated
hereby or thereby, or in any respect relating to the Collateral or any
transaction pursuant to which the Guarantor has incurred any Guarantors'
Obligations (all the foregoing, collectively, the "indemnified liabilities");
provided, however, that the Guarantor shall have no obligation hereunder with
respect to indemnified liabilities directly or primarily arising from the
willful misconduct or gross negligence of the Agent or any Lender. The
agreements in this subsection shall survive repayment of all Secured
Obligations, termination or expiration of this Guaranty Agreement and occurrence
of the Facility Termination Date.
22. Termination. This Guaranty Agreement and all Guarantors' Obligations
hereunder shall terminate on the Facility Termination Date.
23. Remedies Cumulative. All remedies hereunder are cumulative and are not
exclusive of any other rights and remedies of the Agent provided by law or under
the Credit Agreement, the other Loan Documents, or other applicable agreements
or instruments. The making of the Loans to the Borrower pursuant to the Credit
Agreement and the extension of the Revolving Credit Facility
<PAGE>
and the Term Loan Facility to the Borrower pursuant to the Credit Agreement
shall be conclusively presumed to have been made or extended, respectively, in
reliance upon the Guarantor's guaranty of the Guarantors' Obligations pursuant
to the terms hereof.
24. Notices. Any notice required or permitted hereunder shall be given,
(a) with respect to the Guarantor, at the address of the Borrower indicated in
Section 11.2 of the Credit Agreement and (b) with respect to the Agent or a
Lender, at the Agent's address indicated in Section 11.2 of the Credit
Agreement. All such notices shall be given and shall be effective as provided in
Section 11.2 of the Credit Agreement.
25. Governing Law.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED,
AND TO BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS EXECUTION AND
DELIVERY OUTSIDE SUCH STATE.
(b) THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED
IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF MONTGOMERY STATE OF
MARYLAND, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR
HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) AND IN ACCORDANCE WITH SECTION 11.2 OF
THE CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER
THE APPLICABLE LAWS IN EFFECT IN THE STATE OF MARYLAND.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE THE GUARANTOR OR ANY OF THE
GUARANTOR'S
<PAGE>
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE GUARANTOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN
RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY
OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR
FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, THE GUARANTOR HEREBY AGREES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVES,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
TO TRIAL BY JURY IN SUCH ACTION OR PROCEEDING.
[Signature Page Follows.]
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Guaranty Agreement
on the day and year first written above.
[ [insert name of Guarantor ]
WITNESS:
By:___________________________________
_____________________ Name:_________________________________
Title:________________________________
_____________________
AGENT:
WITNESS: NATIONSBANK, NATIONAL ASSOCIATION, as Agent
for the Lenders
By:___________________________________
_____________________ Name:_________________________________
Title:________________________________
_____________________
<PAGE>
EXHIBIT K
Form of Security Agreement
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made and entered into as of
___________, ____ by THE UNDERSIGNED (the "Grantor") and NATIONSBANK, NATIONAL
ASSOCIATION, a national banking association, as Agent (the "Agent") for each of
the lenders (the "Lenders" and collectively with the Agent, the "Secured
Parties") now or hereafter party to the Credit Agreement (as defined below). All
capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned thereto in the Credit Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, the Secured Parties have agreed to provide to Cultural Access
Worldwide, Inc. (the "Borrower") a revolving credit facility pursuant to the
Credit Agreement dated as of April 9, 1998 among the Borrower, the Agent and the
Lenders (as from time to time amended, revised, modified, supplemented or
amended and restated, the "Credit Agreement"); and
WHEREAS, the Grantor is a new Subsidiary of the Borrower and as required
by Section 7.19 of the Credit Agreement has guaranteed the full payment and
performance of the Borrower's Obligations under the Credit Agreement pursuant to
the Guaranty Agreement dated as of the date hereof between the Grantor and the
Agent (the "Guaranty"); and
WHEREAS, the Grantor is also requird to enter into this Agreement pursuant
to Section 7.19 of the Credit Agreement; and
WHEREAS, the Grantor will materially benefit from the Loans and Advances
to be made under the Credit Agreement and the Grantor is a party to that certain
Guaranty Agreement (the "Guaranty") dated as of the date hereof pursuant to
which the Grantor guaranteed the Obligations of the Borrower; and
WHEREAS, as collateral security for payment and performance of its
obligations under the Guaranty, the Grantor is willing to grant to the Agent for
the benefit of the Secured Parties a security interest in all of its personal
property and assets; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
<PAGE>
1. Grant of Security Interest. As collateral security for the payment,
performance, and satisfaction of all obligations and liabilities of the Grantors
under the Guaranty and all of the Borrower's Obligations (collectively, the
"Secured Obligations"), the Grantor hereby affirms, grants, pledges and assigns
to the Agent for the benefit of the Lenders and grants to the Agent for the
benefit of the Lenders a continuing first priority security interest, subject
only to the Liens permitted by Section 8.3 of the Credit Agreement ("Permitted
Liens") in and to all of the property of the Grantor, whether now owned or
existing or hereafter acquired or arising and wheresoever located, including
without limitation the following:
(a) All accounts, accounts receivable, contracts, notes, bills,
acceptances, choses in action, chattel paper, instruments, documents and
other forms of obligations at any time owing to the Grantor arising out of
goods sold or leased or for services rendered by the Grantor, the proceeds
thereof and all of the Grantor's rights with respect to any goods
represented thereby, whether or not delivered, goods returned by customers
and all rights as an unpaid vendor or lienor, including rights of stoppage
in transit and of recovering possession by proceedings including replevin
and reclamation, together with all customer lists, books and records,
ledger and account cards, computer tapes, software, disks, printouts and
records, whether now in existence or hereafter created, relating thereto
(collectively referred to hereinafter as "Accounts");
(b) All inventory of the Grantor wherever located in the United
States of America and any state, district, territory or other political
subdivision thereof, including without limitation, all goods manufactured
or acquired for sale or lease, and any piece goods, raw materials, work in
process and finished merchandise, findings or component materials, and all
supplies, goods, incidentals, office supplies, packaging materials and any
and all items used or consumed in the operation of the business of the
Grantor or which may contribute to the finished product or to the sale,
promotion and shipment thereof, in which the Grantor now or at any time
hereafter may have an interest, whether or not the same is in transit or
in the constructive, actual or exclusive occupancy or possession of the
Grantor or is held by the Grantor or by others for the Grantor's account
(collectively referred to hereinafter as "Inventory");
(c) All goods of the Grantor, including without limitation, all
machinery, equipment, parts, supplies, apparatus, appliances, tools,
patterns, molds, dies, blueprints, fittings, furniture, furnishings,
fixtures and articles of tangible personal property of every description
now or hereafter owned by the Grantor or in which the Grantor may have or
may hereafter acquire any interest, at any location (collectively referred
to hereinafter as "Equipment");
(d) All general intangibles of the Grantor in which a Grantor now
has or hereafter acquires any rights, including but not limited to, causes
of action, corporate or business records, inventions, designs, goodwill,
trade names, trade secrets, trade processes, licenses, permits,
franchises, customer lists, computer programs, all claims under
guaranties, tax refund claims, rights and claims against carriers and
shippers, leases, claims under insurance
K-2
<PAGE>
policies, all rights to indemnification and all other intangible personal
property and intellectual property of every kind and nature (collectively
referred to hereinafter as "General Intangibles");
(e) All rights now or hereafter accruing to the Grantor under
contracts, leases, agreements or other instruments to perform services, to
hold and use land and facilities, and to enforce all rights thereunder
(collectively referred to hereinafter as "Contract Rights");
(f) All books and records relating to any of the Collateral (as
hereinafter defined) (including without limitation, customer data, credit
files, computer programs, printouts, and other computer materials and
records of the Grantor pertaining to any of the foregoing); and
(g) All accessions to, substitutions for and all replacements,
products and proceeds of the foregoing, including without limitation
proceeds of insurance policies insuring the Collateral (as hereinafter
defined).
All of the property and interests in property described in subsections (a)
through (g) and all other property and interests in personal property which
shall, from time to time, secure the Secured Obligations are herein collectively
referred to as the "Collateral."
Notwithstanding the foregoing, to the extent that the terms of any
contract, lease, agreement or other instrument evidencing a Contract Right to
which any of the Grantors is a party prohibit assignment thereof without the
consent of the other party thereto, then such contract, lease, agreement or
other instrument shall not be part of the Collateral unless and until such
consent is obtained. Each of the Grantors covenants and agrees that, upon the
occurrence and continuation of an Event of Default, at the request of the Agent,
it shall use its best efforts to obtain the consent of such third party to the
grant of a security interest in such contract, lease, agreement or other
instrument.
2. Financing Statements. At the time of execution of this Agreement, the
Grantor shall have furnished the Agent with properly executed financing
statements, registrar's certificates, amendments and assignments as prescribed
by the Uniform Commercial Code as presently in effect in the states where the
Collateral is located, prepared and approved by the Agent in form and number
sufficient for filing wherever required with respect to the Collateral, in order
that the Agent, for the benefit of the Lenders, shall have a duly perfected
security interest of record in the Collateral, to the extent a security interest
in such Collateral can be perfected by filing a financing statement, following
the filing of such financing statements with the appropriate local and state
governmental authorities, subject only to Permitted Liens. The Grantor shall
execute as reasonably required by the Agent any additional financing statements
or other documents to effect the same, together with any necessary continuation
statements so long as this Agreement remains in effect.
3. Maintenance of Security Interest. The Grantor will, from time to time,
upon the request of the Agent, deliver specific assignments of Collateral,
together with such other instruments and documents, financing statements,
amendments thereto, assignments or other writings as the
K-3
<PAGE>
Agent may reasonably request to carry out the terms of this Agreement or to
protect or enforce the Agent's security interest in the Collateral.
With respect to any and all Collateral to be secured and conveyed under
this Agreement, the Grantor agrees to do and cause to be done all things
necessary to perfect and keep in full force the security interest granted in
favor of the Agent for the benefit of the Lenders, including, but not limited
to, the prompt payment of all fees and expenses incurred in connection with any
filings made to perfect or continue a security interest in the Collateral in
favor of the Agent for the benefit of the Lenders.
The Grantor agrees to make appropriate entries upon its financial
statements and books and records disclosing the security interest granted
hereunder to the Agent for the benefit of the Secured Parties.
4. Receipt of Payment. In the event an Event of Default shall occur and be
continuing and a Grantor (or any of its affiliates, subsidiaries, stockholders,
directors, officers, employees or agents) shall receive any proceeds of
Collateral, including without limitation monies, checks, notes, drafts or any
other items of payment, the Grantor shall hold all such items of payment in
trust for the Agent, for the benefit of the Secured Parties, and as the property
of the Agent, for the benefit of the Secured Parties, separate from the funds of
the Grantor, and no later than the first Business Day following the receipt
thereof, at the election of the Agent, the Grantor shall cause the same to be
forwarded to the Agent for its custody and possession on behalf of the Lenders
as additional Collateral.
5. Covenants. The Grantor covenants with the Agent that from and after the
date of this Agreement until termination hereof in accordance with Section 28
hereof:
(a) Inspection. The Agent (by any of its officers, employees and
agents), on behalf of the Lenders, shall have the right upon reasonable
prior notice to an executive officer of the Borrower, and at any
reasonable times during the Grantor's usual business hours, to inspect the
Collateral, all records related thereto (and to make extracts or copies
from such records), and the premises upon which any of the Collateral is
located, to discuss the Grantor's affairs and finances with any Person
(other than Account Debtors) and to verify with any Person other than
Account Debtors the amount, quality, quantity, value and condition of, or
any other matter relating to, the Collateral and, if an Event of Default
has occurred and is continuing, to discuss the Grantor's affairs and
finances with the Grantor's Account Debtors and to verify the amount,
quality, value and condition of, or any other matter relating to, the
Collateral and such Account Debtors. Upon or after the occurrence and
during the continuation of an Event of Default, the Agent may at any time
and from time to time employ and maintain on the Grantor's premises a
custodian selected by the Agent who shall have full authority to do all
acts necessary to protect the Agent's (for the benefit of the Secured
Parties) interest. All expenses incurred by the Agent, on behalf of the
Secured Parties, by reason of the employment of such custodian shall be
paid by the Grantor, added to the Secured Obligations and secured by the
Collateral.
K-4
<PAGE>
(b) Assignments, Records and Schedules of Accounts. The Grantor
shall keep accurate and complete records of its Accounts ("Account
Records") and from time to time at intervals designated by the Agent the
Grantor shall provide the Agent with a schedule of Accounts containing
name, address and contact of Account Debtor together with the amount,
invoice date and aging of Accounts in form and substance acceptable to the
Agent describing all Accounts created or acquired by the Grantor
("Schedule of Accounts"); provided, however, that the Grantor's failure to
execute and deliver any such Schedule of Accounts shall not affect or
limit the Agent's security interest or other rights in and to any Accounts
for the benefit of the Secured Parties. If requested by the Agent, the
Grantor shall furnish the Agent with copies of proof of delivery and other
documents relating to the Accounts so scheduled, including without
limitation repayment histories and present status reports (collectively,
"Account Documents") and such other matter and information relating to the
status of then existing Accounts as the Agent shall request. No Grantor
shall remove any Account Records or Account Documents or change its chief
executive offices from the locations set forth in Exhibit A hereto without
30 days prior written notice to the Agent as provided in Section 29 hereof
and delivery to the Agent by the applicable Grantor prior to such removal
of executed financing statements, amendments and other documents necessary
in the determination of the Agent to maintain the security interests
granted hereunder.
(c) Notice Regarding Disputed Accounts. In the event any amounts due
and owing in excess of $250,000 individually, or $500,000 in the aggregate
amount, are in dispute between any Account Debtor and a Grantor (which
shall include without limitation any dispute in which an offset claim or
counterclaim may result), the Grantor shall provide the Agent with written
notice thereof as soon as practicable, explaining in detail the reason for
the dispute, all claims related thereto and the amount in controversy.
(d) Verification of Accounts. If an Event of Default has occurred
and is continuing, any of the Agent's officers, employees or agents shall
have the right, at any reasonable time or times hereafter, to verify with
Account Debtors the validity, amount or any other matter relating to any
Accounts and, whether or not a Default or Event of Default has occurred,
any of the Agent's officers, employees or agents shall have the right to
verify the same with any Grantor.
(e) Change of Trade Styles. No Grantor shall change, amend, alter,
terminate, or cease using its material trade names or styles under which
it sells Inventory as of the date of this Agreement ("Trade Styles"), or
use additional Trade Styles, without giving the Agent at least 30 days'
prior written notice and delivery to the Agent by the applicable Grantor
prior to such removal, change, amendment, alteration, or use, of executed
financing statements, amendments and other documents necessary in the
determination of the Agent to maintain the security interests granted
hereunder.
(f) Safekeeping of Inventory. The Grantor shall be responsible for
the safekeeping of its Inventory, and, subject to Section 13 hereof, in no
event shall the Agent have any responsibility for:
K-5
<PAGE>
(i) Any loss or damage to Inventory or destruction thereof
occurring or arising in any manner or fashion from any cause;
(ii) Any diminution in the value of Inventory; or
(iii) Any act or default of any carrier, warehouseman, bailee
or forwarding agency thereof or other Person in any way dealing with
or handling Inventory.
(g) Location, Records and Schedules of Inventory. The Grantor shall
keep correct and accurate records itemizing and describing the kind, type,
location and quantity of Inventory, its cost therefor and the selling
price of Inventory held for sale, and the daily withdrawals therefrom and
additions thereto, and shall furnish to the Agent from time to time at
reasonable intervals designated by the Agent, a current schedule of
Inventory ("Schedule of Inventory") based upon its most recent physical
inventory and its daily inventory records. The Grantor shall conduct a
physical inventory, no less than annually, and shall furnish to the Agent
such other documents and reports thereof as the Agent shall reasonably
request with respect to the Inventory. Subject to compliance at all times
with Sections 8(c), (d) and (e), no Grantor shall, other than in the
ordinary course of business in connection with its sale, remove any
material amount of Inventory from the locations set forth on Exhibit B
hereto to a location not also set forth on Exhibit B hereto, each of such
locations being owned by a Grantor unless otherwise indicated, without 10
days prior written notice to the Agent as provided in Section 29 hereof
and delivery to the Agent by the applicable Grantor prior to such removal
of executed financing statements, amendments and other documents necessary
in the determination of the Agent to maintain the security interests
granted hereunder.
(h) Returns of Inventory. If any Account Debtor returns any
Inventory to a Grantor after shipment thereof, and such return generates a
credit in excess of $5,000.00 on any individual Account or $25,000.00 in
the aggregate on any Accounts of such Account Debtor, the Grantor shall
notify the Agent in writing of the same as soon as practicable.
(i) Evidence of Ownership of Equipment. The Grantors, as soon as
practicable following a request therefor by the Agent, shall deliver to
the Agent any and all evidence of ownership of any of the Equipment
(including without limitation certificates of title and applications for
title).
(j) Location, Records and Schedules of Equipment. The Grantors shall
maintain accurate, itemized records itemizing and describing the kind,
type, quality, quantity and value of its Equipment and shall furnish the
Agent upon request with a current schedule containing the foregoing
information, but, other than during the continuance of an Event of
Default, not more often than once per fiscal quarter. No Grantor shall
remove any material portion of the Equipment from the locations set forth
in Exhibit C hereto to a location not also set forth on Exhibit C hereto
without at least 30 days' prior written notice to the Agent as provided in
Section 29 hereof and delivery to the Agent by the applicable Grantor
prior
K-6
<PAGE>
to such removal of executed financing statements, amendments and other
documents necessary to maintain the security interests granted hereunder.
(k) Sale or Mortgage of Equipment. Other than in the ordinary course
of business with respect to disposition of obsolescent Equipment or
replacement of Equipment with other Equipment performing similar functions
and having similar or better utility and value, and except as permitted by
the Credit Agreement prior to the occurrence and continuance of an Event
of Default, no Grantor shall sell, exchange, lease, mortgage, encumber,
pledge or otherwise dispose of or transfer any of the Equipment or any
part thereof without the prior written consent of the Agent.
(l) Maintenance of Equipment. The Grantor shall keep and maintain
its Equipment in good operating condition and repair, ordinary wear and
tear excepted. No Grantor shall permit any such items to become a fixture
to real property (unless the Grantor has granted the Agent for the benefit
of the Lenders a lien on such real property) or accessions to other
personal property.
(m) Transfers and Other Liens. The Grantor shall not (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of any of,
or grant any option with respect to, the Collateral, except for
dispositions permitted under the Credit Agreement and Section 5(k) hereof
(it being acknowledged that the security interests of the Agent for the
benefit of the Lenders hereunder are released when such permitted
dispositions occur), (ii) create or suffer to exist any Lien, security
interest or other charge or encumbrance upon or with respect to any of the
Collateral except for the security interests created by this Agreement or
other Permitted Liens; or (iii) take any other action in connection with
any of the Collateral that would materially impair the value of the
interest or rights of the Grantor in the Collateral taken as a whole or
that would materially impair the interest or rights of the Agent for the
benefit of the Lenders.
6. Warranties and Representations Regarding Collateral Generally. The
Grantor warrants and represents that:
(a) It is and, except as permitted by the Credit Agreement and
Section 5(m) hereof, will continue to be the owner of the Collateral
hereunder, now owned and upon the acquisition of the same, free and clear
of all Liens, claims, encumbrances and security interests other than the
security interest in favor of the Agent for the benefit of the Lenders
hereunder and Permitted Liens, and that it will defend such Collateral and
any products and proceeds thereof against all material claims and demands
of all Persons (other than holders of Permitted Liens) at any time
claiming the same or any interest therein adverse to the Secured Parties.
(b) It is duly authorized to execute, deliver and perform this
Agreement, that this Agreement is legal, valid, binding and enforceable
against the Grantor in accordance with its terms except as enforceability
may be limited by bankruptcy, insolvency, reorganization,
K-7
<PAGE>
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(c) No authorization, consent, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or
any other Person is required either (i) for the grant by the Grantor of
the security interests granted hereby or for the execution, delivery or
performance of this Agreement by the Grantor, or (ii) for the perfection
of or the exercise by the Agent, on behalf of the Secured Parties, of its
rights and remedies hereunder, except for the filings required by the
Uniform Commercial Code of the State in which the Grantor maintains its
chief executive office.
(d) No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral purported to be granted
by the Grantor hereunder is on file in any recording office, except such
as may have been filed in favor of the Agent, for the benefit of the
Secured Parties and such as may have been filed with respect to Permitted
Liens.
7. Account Warranties and Representations. With respect to its Accounts,
the Grantor warrants and represents to the Agent for the benefit of the Secured
Parties that the Agent and each Lender may rely on all statements or
representations made by the Grantor on or with respect to any Schedule of
Accounts prepared and delivered by it and that:
(a) All Account Records and Account Documents are located only at
such Grantor's locations as set forth on Exhibit A attached hereto and
incorporated herein by reference or at such other locations as to which
the Grantor has notified the Agent in writing not less than 30 days prior
to such relocation;
(b) The Accounts are genuine, are in all material respects what they
purport to be, are not evidenced by an instrument or document or, if
evidenced by an instrument or document, are only evidenced by one original
instrument or document;
(c) The Accounts cover bona fide sales and deliveries of Inventory
usually dealt in by the Grantor, or the rendition by the Grantor of
services, to an Account Debtor in the ordinary course of business;
(d) The amounts of the face value shown on any Schedule of Accounts
or invoice statement delivered to the Agent with respect to any Account,
are actually owing to the Grantor and are not contingent for any reason;
and there are no setoffs, discounts, allowances, claims, counterclaims or
disputes of any kind or description in an amount greater than $500,000 in
the aggregate, or greater than $100,000 individually, existing or asserted
with respect thereto and the Grantor has not made any agreement with any
Account Debtor thereunder for any deduction therefrom, except as may be
stated in the Schedule of Accounts and reflected in the calculation of the
face value of each respective invoice related thereto;
K-8
<PAGE>
(e) Except for conditions generally applicable to the Grantor's
industry and markets, there are no facts, events, or occurrences known to
the Grantor pertaining particularly to any Accounts which are reasonably
expected to materially impair in any way the validity, collectibility or
enforcement of Accounts that would reasonably be likely, in the aggregate,
to be of material economic value, or in the aggregate materially reduce
the amount payable thereunder from the amount of the invoice face value
shown on any Schedule of Accounts, and on all contracts, invoices and
statements delivered to the Agent, with respect thereto;
(f) The goods or services giving rise thereto are not, and were not
at the time of the sale or performance thereof, subject to any Lien,
claim, encumbrance or security interest, except those of the Agent for the
benefit of Secured Parties and Permitted Liens;
(g) The Accounts have not been pledged to any Person other than to
the Agent for the benefit of the Secured Parties under this Agreement and
will be owned by the Grantor free and clear of any Liens, claims,
encumbrances or security interests except Permitted Liens;
(h) The Agent's and the Lenders' security interest therein will not
be subject to any offset, deduction, counterclaim, Lien or other adverse
condition, other than Permitted Liens; and
(i) The location of its chief executive office and any state in
which it (i) has a place of business in only one county of such state or
(ii) resides in such state (within the meaning of the applicable Uniform
Commercial Code) but does not have any place of business in such state, is
set forth on Exhibit A attached hereto and incorporated herein by
reference and the Grantor shall deliver to the Agent not less than 30 days
written notice prior to any change of such location or status of places of
business or residency.
8. Inventory Warranties and Representations. With respect to its
Inventory, the Grantor warrants and represents to the Agent for the benefit of
the Lenders that the Secured Parties may rely on all statements or
representations made by the Grantor on or with respect to any Inventory and that
none of its Inventory is or will be subject to any Lien, claim, encumbrance or
security interest whatsoever, except for the security interest of the Agent for
the benefit of the Lenders hereunder and Permitted Liens;
9. Equipment Representations and Warranties. With respect to its
Equipment, the Grantor warrants and represents to the Agent for the benefit of
the Lenders that the Secured Parties may rely on all statements or
representations made by the Grantor on or with respect to any Equipment and
that:
(a) All Equipment (other than Equipment located at facilities of
Grantor's suppliers) is located only at the Grantor's locations set forth
in Exhibit C hereto or at such other locations as to which the Grantor has
notified the Agent in writing not less than 30 days
K-9
<PAGE>
prior to such relocation and has provided to the Agent executed financing
statements for such location satisfying the requirements of Section 2
hereof;
(b) None of its Equipment is or will be subject to any Lien, claim,
encumbrance or security interest whatsoever, except for the security
interest of the Agent, for the benefit of the Lenders, hereunder and
Permitted Liens;
(c) No Equipment of the Grantor is at or shall be kept at any
location that is leased by the Grantor from any other Person unless such
location and lessee is set forth on Exhibit C hereto.
10. Casualty and Liability Insurance Required.
(a) The Grantor will keep the Collateral continuously insured
against such risks as are customarily insured against by businesses of
like size and type engaged in the same or similar operations including,
without limiting the generality of any other covenant herein contained:
(i) casualty insurance on the Inventory and the Equipment in
an amount not less than the full insurable value thereof, against
loss or damage by theft, fire and lightning and other hazards
ordinarily included under uniform broad form standard extended
coverage policies, limited only as may be provided in the standard
broad form of extended coverage endorsement at the time in use in
the states in which the Collateral is located;
(ii) comprehensive general liability insurance against claims
for bodily injury, death or property damage occurring with or about
such Collateral (such coverage to include provisions waiving
subrogation against the Secured Parties), with Agent and Lenders as
additional insured parties, in amounts as shall be reasonably
satisfactory to Agent;
(iii) liability insurance with respect to the operation of its
facilities under the workers' compensation laws of the states in
which such Collateral is located; and
(iv) business interruption insurance.
(b) Each insurance policy obtained in satisfaction of the
requirements of Section 10(a) hereof:
(i) may be provided by blanket policies now or hereafter
maintained by the Grantor or the Borrower;
(ii) shall be issued by such insurer (or insurers) as shall be
financially responsible, of recognized standing and reasonably
acceptable to the Agent;
K-10
<PAGE>
(iii) shall be in such form and have such provisions
(including without limitation the loss payable clause, the waiver of
subrogation clause, the deductible amount, if any, and the standard
mortgagee endorsement clause), as are generally considered standard
provisions for the type of insurance involved and are reasonably
acceptable in all respects to the Agent;
(iv) shall prohibit cancellation or substantial modification,
termination or lapse in coverage by the insurer without at least 30
days' prior written notice to the Agent, except for non-payment of
premium, in which case such policies shall provide ten (10) days'
prior written notice;
(v) without limiting the generality of the foregoing, all
insurance policies where applicable under Section 10(a)(i) carried
on the Collateral shall name the Agent, for the benefit of the
Lenders, as loss payee and the Agent and Lenders as parties insured
thereunder in respect of any claim for payment.
(c) Prior to expiration of any such policy, the Grantor shall
furnish the Agent with evidence reasonably satisfactory to the Agent that
the policy or certificate has been renewed or replaced or is no longer
required by this Agreement.
(d) The Grantor hereby irrevocably makes, constitutes and appoints
the Agent (and all officers, employees or agents designated by the Agent),
for the benefit of the Lenders, effective upon the occurrence and during
the continuance of an Event of Default, as the Grantor's true and lawful
attorney (and agent-in-fact) for the purpose of making, settling and
adjusting claims under such policies of insurance, endorsing the name of
the Grantor on any check, draft, instrument or other item or payment for
the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance.
(e) In the event the Grantor shall fail to maintain, or fail to
cause to be maintained, the full insurance coverage required hereunder or
shall fail to keep any of its Collateral in good repair and good operating
condition subject to ordinary wear and tear, the Agent may (but shall be
under no obligation to), without waiving or releasing any Secured
Obligation or Event of Default by the Grantor hereunder, contract for the
required policies of insurance and pay the premiums on the same or make
any required repairs, renewals and replacements; and all sums so disbursed
by Agent, including reasonable attorneys' fees, court costs, expenses and
other charges related thereto, shall be payable on demand by the Grantor
to the Agent and shall be additional Secured Obligations secured by the
Collateral.
(f) The Grantor agrees that to the extent that it shall not carry
insurance required by Section 10(a) hereof, it shall in the event of any
loss or casualty pay promptly to the Agent, for the benefit of the Secured
Parties, for application by the Grantor or the Agent, as the case may be,
in accordance with the provisions of Section 10(h) hereof, such amount as
would have been received as Net Proceeds (as hereinafter defined) by the
Agent, for the
K-11
<PAGE>
benefit of the Secured Parties, under the provisions of Section 10(h)
hereof had such insurance been carried to the extent required.
(g) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 10(a)(ii) and 10(a)(iii) hereof shall be applied by
the Grantor toward extinguishment of the defect or claim or satisfaction
of the liability with respect to which such insurance proceeds may be
paid.
(h) The Net Proceeds of the insurance carried with respect to the
Collateral pursuant to the provisions of Section 10(a)(i) hereof shall be
paid to the Grantor and held by the Grantor in a separate account and
applied as follows: (i) as long as no Event of Default shall have occurred
and be continuing, after any loss under any such insurance and payment of
the proceeds of such insurance, the Grantor shall have a period of 30 days
after payment of the insurance proceeds with respect to such loss to elect
to either (x) repair or replace the Collateral so damaged, (y) deliver
such Net Proceeds to the Agent, for the benefit of the Lenders, as
additional Collateral or (z) apply such Net Proceeds to the acquisition of
tangible assets used or useful in the conduct of the business of the
Grantor, subject to the provisions of this Agreement. If the Grantor
elects to repair or replace the Collateral so damaged, the Grantor agrees
the Collateral shall be repaired to a condition substantially similar to
its condition prior to damage or replaced with Collateral in a condition
substantially similar to the condition of the Collateral so replaced prior
to damage; and (ii) at all times during which an Event of Default shall
have occurred and be continuing, after any loss under such insurance and
payment of the proceeds of such insurance, the Grantor shall immediately
deliver such Net Proceeds to such Agent, for the benefit of the Secured
Parties, as additional Collateral.
(i) "Net Proceeds" when used with respect to any insurance proceeds
shall mean the gross proceeds from such proceeds, award or other amount,
less all taxes, fees and expenses (including attorneys' fees) incurred in
the realization thereof.
(j) In case of any material damage to or destruction of all or any
part of the Collateral pledged hereunder by a Grantor, the Grantor shall
give prompt notice thereof to the Agent. Each such notice shall describe
generally the nature and extent of such damage, destruction, taking, loss,
proceeding or negotiations. The Grantor is hereby authorized and empowered
to adjust or compromise any loss under any such insurance.
11. Rights and Remedies Upon Event of Default. Upon and after an Event of
Default, the Agent shall have the following rights and remedies on behalf of the
Lenders in addition to any rights and remedies set forth elsewhere in this
Agreement, all of which may be exercised with or, if allowed by law, without
notice to a Grantor:
(a) All of the rights and remedies of a secured party under the
Uniform Commercial Code of the state where such rights and remedies are
asserted, or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall
K-12
<PAGE>
be exclusive, to the extent permitted by law, in addition to any other
rights and remedies contained in this Agreement, the Guaranty or any other
Loan Document;
(b) The right to foreclose the Liens and security interests created
under this Agreement by any available judicial procedure or without
judicial process;
(c) The right to (i) enter upon the premises of a Grantor through
self-help and without judicial process, without first obtaining a final
judgment or giving the Grantor notice and opportunity for a hearing on the
validity of the Agent's claim and without any obligation to pay rent to
the Grantor, or any other place or places where any Collateral is located
and kept, and remove the Collateral therefrom to the premises of the Agent
or any agent of the Agent, for such time as the Agent may desire, in order
effectively to collect or liquidate the Collateral, and (ii) require the
Grantor to assemble the Collateral and make it available to the Agent at a
place to be designated by the Agent that is reasonably convenient to both
parties;
(d) The right to (i) demand payment of the Accounts; (ii) enforce
payment of the Accounts, by legal proceedings or otherwise; (iii) exercise
all of a Grantor's rights and remedies with respect to the collection of
the Accounts and General Intangibles; (iv) settle, adjust, compromise,
extend or renew the Accounts, General Intangibles and Contract Rights; (v)
settle, adjust or compromise any legal proceedings brought to collect the
Accounts; (vi) if permitted by applicable law, sell or assign the
Accounts, General Intangibles and Contract Rights upon such terms, for
such amounts and at such time or times as the Agent deems advisable; (vii)
discharge and release the Accounts; (viii) take control, in any manner, of
any item of payment or proceeds referred to in Section 4 above; (ix)
prepare, file and sign a Grantor's name on a Proof of Claim in bankruptcy
or similar document against any Account Debtor; (x) prepare, file and sign
a Grantor's name on any notice of Lien, assignment or satisfaction of Lien
or similar document in connection with the Accounts; (xi) endorse the name
of a Grantor upon any chattel paper, document, instrument, invoice,
freight bill, bill of lading or similar document or agreement relating to
the Accounts, Inventory or Equipment; (xii) use the information recorded
on or contained in any data processing equipment and computer hardware and
software relating to any Collateral to which a Grantor has access; (xiii)
to open the Grantor's mail and collect any and all amounts due to the
Grantor from Persons obligated on any Accounts ("Account Debtors"); (xiv)
to take over the Grantor's post office boxes or make other arrangements as
the Agent, on behalf of the Lenders, deems necessary to receive the
Grantor's mail, including notifying the post office authorities to
change the address for delivery of the Grantor's mail to such address as
the Agent, on behalf of the Lenders, may designate; and (xv) to notify any
or all Account Debtors that the Accounts have been assigned to the Agent
for the benefit of the Lenders and that Agent has a security interest
therein for the benefit of the Lenders (provided that the Agent may at any
time give such notice to an Account Debtor that is a department, agency or
authority of the United States government); the Grantor hereby agrees that
any such notice, in the Agent's sole discretion, may be sent on the
Grantor's stationery, in which event the Grantor shall co-sign such notice
with the Agent; and (xvi) do all acts and things and
K-13
<PAGE>
execute all documents necessary, in Agent's sole discretion, to collect
the Accounts and General Intangibles; and
(e) The right to sell, assign, lease or to otherwise dispose of all
or any Collateral in its then existing condition, or after any further
manufacturing or processing thereof, at public or private sale or sales,
with such notice as may be required by law, in lots or in bulk, for cash
or on credit, with or without representations and warranties, all as the
Agent, in its sole discretion, may deem advisable. The Agent shall have
the right to conduct such sales on a Grantor's premises or elsewhere and
shall have the right to use a Grantor's premises without charge for such
sales for such time or times as the Agent may see fit. The Agent may, if
it deems it reasonable, postpone or adjourn any sale of the Collateral
from time to time by an announcement at the time and place of such
postponed or adjourned sale, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The Grantor
agrees that the Agent has no obligation to preserve rights to the
Collateral against prior parties or to marshall any Collateral for the
benefit of any Person. The Agent is hereby granted a license or other
right to use, without charge, the Grantor's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks and
advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale and
selling any Collateral and a Grantor's rights under any license and any
franchise agreement shall inure to the Agent's benefit. If any of the
Collateral shall require repairs, maintenance, preparation or the like, or
is in process or other unfinished state, the Agent shall have the right,
but shall not be obligated, to perform such repairs, maintenance,
preparation, processing or completion of manufacturing for the purpose of
putting the same in such saleable form as the Agent shall deem
appropriate, but the Agent shall have the right to sell or dispose of the
Collateral without such processing and no Grantor shall have any claim
against the Agent for the value that may have been added to such
Collateral with such processing. In addition, the Grantor agrees that in
the event notice is necessary under applicable law, written notice mailed
to the Grantor in the manner specified herein ten (10) days prior to the
date of public sale of any of the Collateral or prior to the date after
which any private sale or other disposition of the Collateral will be made
shall constitute commercially reasonable notice to the Grantor. All notice
is hereby waived with respect to any of the Collateral which threatens to
decline speedily in value or is of a type customarily sold on a recognized
market. The Agent may purchase all or any part of the Collateral at public
or, if permitted by law, private sale, free from any right of redemption
which is hereby expressly waived by the Grantor and, in lieu of actual
payment of such purchase price, may set off the amount of such price
against the Secured Obligations. The net cash proceeds resulting from the
collection, liquidation, sale, lease or other disposition of the
Collateral shall be applied first to the expenses (including all
attorneys' fees) of retaking, holding, storing, processing and preparing
for sale, selling, collecting, liquidating and the like, and then to the
satisfaction of all Secured Obligations in accordance with the terms of
Section 9.5 of the Credit Agreement. Any sale or other disposition of the
Collateral and the possession thereof by the Agent shall be in compliance
with all provisions of applicable law (including applicable provisions of
the Uniform Commercial Code). The Grantor shall be liable to the Agent,
for the benefit of the Lenders,
K-14
<PAGE>
and shall pay to the Agent, for the benefit of the Lenders, on demand any
deficiency which may remain after such sale, disposition, collection or
liquidation of the Collateral.
12. Anti-Marshalling Provisions. The right is hereby given by the Grantor
to the Agent, for the benefit of the Secured Parties, to make releases (whether
in whole or in part) of all or any part of the Collateral agreeable to the Agent
without notice to, or the consent, approval or agreement of other parties and
interests, including junior lienors, which releases shall not impair in any
manner the validity of or priority of the Liens and security interests in the
remaining Collateral conferred under such documents, nor release the Grantor
from personal liability for the Secured Obligations hereby secured.
Notwithstanding the existence of any other security interest in the Collateral
held by the Agent, for the benefit of the Secured Parties, the Agent shall have
the right to determine the order in which any or all of the Collateral shall be
subjected to the remedies provided in this Agreement. The proceeds realized upon
the exercise of the remedies provided herein shall be applied by the Agent, for
the benefit of the Secured Parties, in the manner provided in Section 9.5 of the
Credit Agreement. The Grantor hereby waives any and all right to require the
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
13. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Agent, for the benefit of
the Secured Parties, from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement that are
incurred by the Agent (including without limitation enforcement of this
Agreement), except claims, losses or liabilities directly resulting from
the Agent's gross negligence or willful misconduct.
(b) The Grantor will upon demand pay to the Agent, for the benefit
of the Secured Parties, the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel and of any
experts and agents, that the Agent, for the benefit of the Lenders, may
incur in connection with (i) the administration of this Agreement, (ii)
the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Secured Parties, or (iv) the
failure by the Grantor to perform or observe any of the provisions hereof.
14. Appointment of Agent as Grantor's Lawful Attorney. Without limitation
of any other provision of this Agreement, the Grantor irrevocably designates,
makes, constitutes and appoints the Agent (and all Persons designated by the
Agent), for the benefit of the Secured Parties, as the Grantor's true and lawful
attorney (and agent-in-fact) at all times on and after the occurrence and during
the continuation of an Event of Default, to take all actions and to do all
things required to be taken or done by the Grantor under this Agreement,
including without limitation:
K-15
<PAGE>
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) above;
(c) to endorse the Grantor's name on any checks, notes, drafts or
any other payment relating to or constituting proceeds of the Collateral
which comes into the Agent's possession or Agent's control, and deposit
the same to the account of the Agent, for the benefit of the Lenders, on
account and for payment of the Secured Obligations;
(d) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Agent, for the benefit of the Lenders, with respect to any of the
Collateral; and
(e) to execute, in connection with the sale provided for in Section
11, any endorsement, assignments, or other instruments of conveyance or
transfer with respect to the Collateral.
All acts of the Agent or its designee taken pursuant to this Section 14 are
hereby ratified and confirmed by the Grantor and the Agent or its designee shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or law, other than as a result of its gross
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable by the Grantor until this Agreement has been terminated in
accordance with Section 28 hereof.
15. Supplemental Documentation. At the Agent's request, the Grantor shall
execute and deliver to the Agent, at any time or times hereafter, all documents,
instruments and other written matter that the Agent may reasonably request to
perfect and maintain perfected the Agent's (for the benefit of the Secured
Parties) security interest in the Collateral, in form and substance reasonably
acceptable to the Agent, and pay all charges, expenses and fees the Agent may
reasonably incur in filing any of such documents, and all taxes relating
thereto. The Grantor agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or a financing statement is sufficient as a
financing statement and may be filed by the Agent in any filing office.
16. Waivers. In addition to the other waivers contained herein, the
Grantor hereby expressly waives, to the extent permitted by law: presentment for
payment, demand, protest, notice of demand, notice of protest, notice of default
or dishonor, notice of payments and nonpayments and all other notices and
consents to any action taken by the Agent unless expressly required by this
Agreement.
17. Trade Names. The Grantor represents that the only trade name(s) or
style(s) used by the Grantor are as set forth on Exhibit D, next to the name of
the Grantor.
K-16
<PAGE>
18. Absolute Rights and Obligations. All rights of the Secured Parties in
the Security Interests granted hereunder, and each of the Secured Obligations,
shall be absolute and unconditional irrespective of:
(a) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to departure from, the Credit
Agreement or any other Loan Document, including, but not limited to, (i)
an increase or decrease in the Secured Obligations and (ii) an amendment
of any Loan Document to permit the Agent or the Lenders or any one or more
of them to extend further or additional credit to the Borrower in any form
including credit by way of loan, purchase of assets, guarantee or
otherwise, which credit shall thereupon be and become subject to the
Credit Agreement and the other Loan Documents as a Secured Obligation;
(b) any taking and holding of collateral or guarantees (including
without limitation any collateral pledged as security for the Secured
Obligations under the other Security Instruments) for all or any of the
Secured Obligations; or any amendment, alteration, exchange, substitution,
transfer, enforcement, waiver, subordination, termination or release of
any such collateral or guarantees, or any non-perfection of any such
collateral, or any consent to departure from any such guaranty;
(c) any manner of application of collateral, or proceeds thereof,
securing payment or enforcement of all or any of the Secured Obligations,
or the manner of sale of any such collateral;
(d) any consent by the Secured Parties to the change, restructure or
termination of the corporate structure or existence of the Borrower or any
Grantor and any corresponding restructure of the Secured Obligations, or
any other restructure or refinancing of the Secured Obligations or any
portion thereof;
(e) any modification, compromise, settlement or release by the
Secured Parties, by operation of law or otherwise, collection or other
liquidation of the Secured Obligations or the liability of the Borrower,
any Grantor or any Grantor (other than the Grantor against which this
Agreement is to be enforced), or of any collateral for the Secured
Obligation (including without limitation any collateral pledged as
security for the Secured Obligations under the other Security
Instruments), in whole or in part, and any refusal of payment by the Agent
or any Lender in whole or in part, from any obligor or Grantor (other than
the Grantor against which this Agreement is sought to be enforced) in
connection with any of the Secured Obligations, whether or not with notice
to, or further assent by, or any reservation of rights against, any
Grantor; or
(f) any other circumstance (including without limitation any statute
of limitations) that might otherwise constitute a defense available to, or
a discharge of, the Borrower, any Grantor or a Grantor.
K-17
<PAGE>
The granting of a Security Interest in the Collateral shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must otherwise be returned by any
Secured Party, upon the insolvency, bankruptcy or reorganization of the Borrower
or any Grantor or otherwise, all as though such payment had not been made.
19. Definitions. All terms used herein shall be defined in accordance with
the appropriate definitions appearing in the Uniform Commercial Code as in
effect in Maryland, and such definitions are hereby incorporated herein by
reference and made a part hereof.
20. Entire Agreement. This Agreement, together with the Credit Agreement,
the Guaranty Agreement and other Loan Documents, constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Neither this Agreement nor any portion or provision hereof may be
changed, altered, modified, supplemented, discharged, canceled, terminated, or
amended orally or in any manner other than by an agreement, in writing signed by
the parties hereto.
21. Further Assurances. The Grantor agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Agent may
at any time reasonably request in connection with the administration or
enforcement of this Agreement or related to the Collateral or any part thereof
or in order better to assure and confirm unto the Agent its rights, powers and
remedies for the benefit of the Secured Parties hereunder. The Grantor hereby
consents and agrees that the issuers of or obligors in respect of the Collateral
shall be entitled to accept the provisions hereof as conclusive evidence of the
right of the Agent, on behalf of the Secured Parties, to exercise its rights
hereunder with respect to the Collateral, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by any Grantor or any
other Person to any of such issuers or obligors.
22. Binding Agreement; Assignment. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that, except as permitted in the Credit Agreement, no Grantor shall be permitted
to assign this Agreement or any interest herein or in the Collateral, or any
part thereof, or otherwise pledge, encumber or grant any option with respect to
the Collateral, or any part thereof, or any cash or property held by the Agent
as Collateral under this Agreement. All references herein to the Agent shall
include any successor thereof, each Lender and any other obligees from time to
time of the Obligations.
23. Swap Agreements. All obligations of the Borrower under Swap Agreements
shall be deemed to be Secured Obligations secured hereby, and each Lender or
affiliate of a Lender party to any such Swap Agreement shall be deemed to be a
Secured Party hereunder.
K-18
<PAGE>
24. Severability. The provisions of this Agreement are independent of and
separable from each other. If any provision hereof shall for any reason be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of any other provision hereof, but this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
25. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Grantor, and the right, remedies, powers, and
privileges of the Agent hereunder shall inure to the benefit of the successors
and assigns of the Agent; provided, however, that, except as permitted in the
Credit Agreement, no Grantor shall make any assignment hereof without the prior
written consent of the Agent.
26. Counterparts. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
27. Remedies Cumulative. All remedies hereunder are cumulative and are not
exclusive of any other rights and remedies of the Agent provided by law or under
the Credit Agreement, the other Loan Documents, or other applicable agreements
or instruments. The making of the Loans to the Borrower pursuant to the Credit
Agreement and the extension of the Revolving Credit Facility to the Borrower
pursuant to the Credit Agreement shall be conclusively presumed to have been
made or extended, respectively, in reliance upon each Assignor's assignment of
the Collateral pursuant to the terms hereof.
28. Termination. This Agreement and all obligations of the Grantor
hereunder shall terminate on the Facility Termination Date, at which time the
Liens and rights granted to the Agent for the benefit of the Secured Parties
hereunder shall automatically terminate and no longer be in effect, and the
Collateral shall automatically be released from the Liens created hereby. Upon
such termination of this Agreement, the Agent shall, at the sole expense of the
Grantors, reassign and redeliver to each applicable Grantor such Collateral then
held by or for the Agent and execute and deliver to the Grantor such documents
as the Grantor shall reasonably request and take such further actions as may be
necessary to effect the same and as shall be reasonably acceptable to the Agent.
29. Notices. Any notice required or permitted hereunder shall be given,
(a) with respect to the Borrower or any Grantor, at the Borrower's address
indicated in Section 11.2 of the Credit Agreement and (b) with respect to the
Agent or a Lender, at the Agent's address indicated in Section 11.2 of the
Credit Agreement. All such notices shall be given and shall be effective as
provided in Section 11.2 of the Credit Agreement.
30. Governing Law; Venue; Waiver of Trial by Jury.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED,
AND TO BE FULLY PERFORMED,
K-19
<PAGE>
IN SUCH STATE NOTWITHSTANDING ITS EXECUTION AND DELIVERY OUTSIDE SUCH
STATE.
(b) THE GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN
ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF MONTGOMERY, STATE OF
MARYLAND, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE GRANTOR EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY
HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF
ANY SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) THE GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED
BY SECTION 11.2 OF THE CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF MARYLAND.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE THE GRANTOR OR ANY OF THE
GRANTOR'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT
PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE GRANTOR
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE
JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY
REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE
TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, THE GRANTOR AND THE AGENT ON BEHALF OF THE
LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED
K-20
<PAGE>
BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO
TRIAL BY JURY IN SUCH ACTION OR PROCEEDING.
[Signature pages follow]
K-21
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Security Agreement
on the day and year first written above.
GRANTOR:
[ insert name of Grantor ]
WITNESS:
By:___________________________________
_____________________ Name:_________________________________
Title:________________________________
_____________________
AGENT:
NATIONSBANK, NATIONAL ASSOCIATION, as Agent
for the Lenders
WITNESS:
By:___________________________________
_____________________ Name:_________________________________
Title:________________________________
_____________________
SECURITY AGREEMENT
SIGNATURE PAGE 1 of 1
<PAGE>
EXHIBIT A
Location of Accounts
<PAGE>
EXHIBIT B
Location of Inventory
<PAGE>
EXHIBIT C
Location of Equipment
<PAGE>
EXHIBIT D
Trade Names and Styles
<PAGE>
EXHIBIT L
Form of Subordination Provisions
SUBORDINATION AGREEMENT
THIS AGREEMENT made and entered into as of this _____ day of April, 1998,
by and between _____________________________, a __________ corporation ("Subdebt
Holder"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking association
as Agent (the "Agent") for the Lender, as defined in the Credit Agreement (the
"Superior Lender") party to the Credit Agreement, as defined below, of even date
herewith (the "Credit Agreement").
WITNESSETH:
WHEREAS, Cultural Access Worldwide, Inc., a Delaware corporation (the
"Borrower"), the Agent and the Superior Lender have entered into that certain
Credit Agreement, dated as of April 9, 1998, pursuant to which the Agent has
made revolving loans to the Borrower evidenced by a promissory note of the
Borrower (the "Note") (as at any time amended, restated, modified or
supplemented (the "Credit Agreement"); and
WHEREAS, the Borrower and Subdebt Holder have entered into that certain
______ Agreement, dated as of ________, 199_ , (as amended, modified or
restated, the "Subdebt Agreement") pursuant to which the Borrower has agreed to
extend to _______________________ (the "Subordinated Debt"); and
WHEREAS, pursuant to the Credit Agreement, the Borrower may incur
indebtedness which contains the subordination provisions contained herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Subordination.
(a) The following terms shall have the following meanings:
(i) "Subordinated Obligations" shall mean all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by the
Borrower to the Subdebt Holder of every kind and description
(whether or not evidenced by any note or instrument and whether or
not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising
pursuant to the terms of the Subdebt Agreement or the Subordinated
Debt, including without limitation all interest, fees, charges,
expenses, attorneys' fees and accountants' fees chargeable to the
Borrower or payable by the Borrower thereunder; and
L-1
<PAGE>
(ii) "Superior Indebtedness" as used herein shall mean all
indebtedness, now existing or hereafter created, of the Borrowers to
the Superior Lender (or to any financial institution owning or
holding a participation interest or an assignment of an undivided
interest in any Note), arising under or in connection with the
Credit Agreement relating to the revolving loans made from time to
time to the Borrower pursuant to the terms and conditions thereof.
The Superior Indebtedness shall include amounts accruing subsequent
to the filing of any bankruptcy, receivership, insolvency or like
petition.
(b) The payment and performance of each of the Subordinated
Obligations is and shall be expressly subordinate and junior in right of
payment to the Superior Indebtedness, and any liens or security interests
of the Subdebt Holder, in the property of the Borrower now existing or
hereafter created, whether or not created in violation of this Agreement,
and securing payment of the Subordinated Obligations, are and will be
expressly subordinated and junior to each of the liens and security
interests in such property created by the Credit Agreement and related
documents without regard to the time or order of attachment or perfection
of such liens or security interests or the time or order of filing or
recording.
(c) So long as any part of the Superior Indebtedness remains
outstanding and until the Credit Agreement shall have been terminated and
the Note fully and finally paid and satisfied, the Subdebt Holder will not
either accept payment, other than payment of interest and payments of
principal as provided in Section 2(a), but only so long as no Default or
Event of Default exist under the Credit Agreement, in any manner
whatsoever of the Subordinated Obligations or take any action (i) to
accelerate any of the Subordinated Obligations, (ii) to collect payment of
any of the Subordinated Obligations, or (iii) to foreclose, take any
action or otherwise realize (whether by judicial action, under power of
sale or by self-help repossession or otherwise) on any security or
guaranty given by any Person to secure or guarantee any of the
Subordinated Obligations including without limitation any actions or
remedies of the Subdebt Holder set forth in the Subdebt Agreement.
(d) The Subdebt Holder agrees that it will not after the date hereof
accept, assert or permit to be created a Lien in any property of the
Borrower as security for the payment or performance of any of the
Subordinated Obligations other than purchase money Liens created in
connection with an Acquisition in favor of the person selling.
(e) Except as provided in Section 1(c), the Agent shall have the
exclusive right to collect, foreclose upon, sell, transfer, liquidate or
otherwise dispose of the Collateral (as defined in the Credit Agreement)
as provided in the Credit Agreement or by applicable law, in the manner
deemed appropriate by the Agent, without regard to any Liens, if any, of
the Subdebt Holder in such Collateral, and the Subdebt Holder will not
hinder Agent's actions in enforcing its remedies with respect to such
Collateral.
(f) In the event of any distribution, division or application,
partial or complete, voluntary or involuntary, by operation of law or
otherwise, of all or any part of the assets of the Borrower or the
proceeds thereof to creditors of the Borrower or upon any indebtedness
L-2
<PAGE>
of the Borrower, by reason of the liquidation, dissolution or other
winding up of the Borrower or any of their business, or in the event of
any sale, receivership, insolvency or bankruptcy proceeding, or assignment
for the benefit of creditors, or any proceeding by or against the Borrower
for any relief under any bankruptcy or insolvency law or laws relating to
the relief of debtors, readjustment of indebtedness, reorganizations,
compositions or extensions, then and in any such event any payment or
distribution of any kind or character, either in cash, securities or other
property, which shall be payable or deliverable upon or with respect to
any or all of the Subordinated Obligations shall be paid or delivered
directly to the Agent for application on any Superior Indebtedness, due or
not due, until such Superior Indebtedness of the Borrower to the Agent
shall have been finally and fully paid and satisfied and the Note shall
have been canceled. Subject to the limitation set forth in Section 1(c)
the Subdebt Holder agrees that it will not file any claim in bankruptcy or
an involuntary proceeding, receivership or other similar action without
expressly acknowledging and agreeing in writing in any filing or
proceeding that its claim is subordinate in all respects to the Superior
Indebtedness.
(g) Except as provided in Section 1(c), should any payment or
distribution or security or proceeds thereof be received by the Subdebt
Holder upon or with respect to any of the Subordinated Obligations prior
to the full and final payment and satisfaction of all Superior
Indebtedness and cancellation of the Note, such party will forthwith
deliver the same to the Agent in precisely the form received (except for
the endorsement or assignment of such party where necessary) for
application on any Superior Indebtedness, due or not due, and, until so
delivered, the same shall be held in trust by such party as property of
the Agent and shall not be commingled with any other funds or property
such party or any other Person. In the event of the failure of the Subdebt
Holder to make any such endorsement or assignment, the Agent, or any of
its officers or employees on behalf of the Agent, is hereby irrevocably
authorized and appointed attorney-in-fact to make the same.
(h) The Subdebt Holder agrees not to pledge, sell, assign or
transfer to others any claim it has or may have against the Borrower while
any Superior Indebtedness remains unpaid or the Note remain outstanding.
(i) All notes, including without limitation the Subordinated Debt,
or other evidences of indebtedness accepted by the Subdebt Holder from the
Borrower shall contain a specific statement therein that the indebtedness
thereby evidenced is subordinated to the Superior Indebtedness pursuant to
the provisions of this Agreement.
2. Permitted Payments.
(a) So long as part of the Superior Indebtedness remains outstanding
and until such time as the Agent provides the Subdebt Holder with written
notice that a Default or Event of Default (as defined in the Credit
Agreement) has occurred (a "Default Notice"), the Borrower may make and
the Subdebt Holder may receive (i) regularly scheduled interest payments
when and as due on the Subordinated Debt pursuant to the original terms
thereof and (ii) if the Subordinated Debt has a term of repayment of not
less than 3 years and
L-3
<PAGE>
provides for equal principal payments in each year of the term of such
Subordinated Debt, regularly scheduled principal payments when and as due.
Upon the occurrence of an Event of Default, the Borrower may not make, and
the Subdebt Holder may not receive, regularly scheduled interest or
principle payments pursuant to the terms of the Subordinated Debt. The
Agent, in its discretion, may issue a Default Notice with respect to each
and every such Default or Event of Default that occurs, but shall not have
the right to issue more than one Default Notice with respect to any
particular Default or Event of Default; provided, however, that if a
Default or Event of Default has been cured or waived (or deemed waived as
provided below), but subsequently reoccurs, then a new Default Notice may
be sent with respect thereto. In the event that all Defaults and Events of
Default shall be cured or waived, then the Borrower may resume the making
of payments otherwise permitted hereunder, subject to the terms hereof.
(b) Except as expressly set forth above, the Subdebt Holder, prior
to the final payment and satisfaction in full in cash of the Superior
Indebtedness and the termination of all financing arrangements between the
credit parties and the Superior Lender in connection with the Credit
Agreement (including letters of credit), shall have no right to enforce
any payment with respect to the Subordinated Obligations, or to otherwise
take any action against any Subordinated Obligations credit party or any
of their respective assets in connection therewith.
(c) It is understood and agreed by the Subdebt Holder that payments
of the Subordinated Obligations other than as expressly permitted in this
Section 3 shall not be permitted.
3. Representations and Warranties. The Subdebt Holder represents and
warrants that:
(a) Each of the Subdebt Agreement and this Agreement has been duly
executed and delivered by the Subdebt Holder and constitutes a valid and
binding obligation of the Subdebt Holder, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and general equitable principles.
(b) No representation or warranty by the Subdebt Holder in this
Agreement or the Subdebt Agreement, and no certificate or document
furnished or to be furnished by the Subdebt Holder in connection herewith
or therewith or with the transactions contemplated hereby or thereby,
contains or will contain any untrue statement of material fact, or omits
or will omit any fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
(c) The Subdebt Holder has not, prior to the date hereof, granted,
assigned or conveyed, or agreed to grant, assign or convey on or after the
date hereof, to anyone any interest whatsoever in the Subordinated
Obligations.
L-4
<PAGE>
(d) No other party owns any interest in the Subordinated Obligations
or has any right to acquire any such interest.
4. Subordinated Debt; Collateral. The Subdebt Holder covenants and agrees
not to sell, donate, assign or otherwise voluntarily transfer the Subordinated
Debt without giving the Agent prior written notice of his intention to do so.
Nothing in this Agreement shall affect the Subdebt Holder's rights, if any, in
the Collateral securing payment of the Subordinated Debt, nor shall this
Agreement be deemed to subordinate the Subdebt Holder's rights in the Collateral
to any rights that the Agent or the Superior Lender may hereafter acquire.
5. Consents to the Superior Lender" Acts. The Subdebt Holder acknowledges
and agrees that the covenants and agreements made in this Agreement shall
continue in full force and effect until the Superior Indebtedness is paid in
full notwithstanding any act or failure to act by the Agent or the Superior
Lender, including by way of example and not by limitation, the Agent or the
Superior Lender's: (i) refinancing, modification, amendment, rearrangement,
postponement, extension, renewal, acceleration or demand for payment of the
Superior Indebtedness in whole or in part and as often as the Superior Lender
may wish; (ii) waiver, failure to enforce, surrender, impairment, modification
or exchange of any of its or their rights under any of the Note, the Credit
Agreement or any other instruments evidencing, relating to, securing or
guaranteeing any of the Borrower's indebtedness to the Superior Lender; (iii)
settlement, release (by operation of law or otherwise), compound, compromise,
collection or liquidation, in any manner, of any indebtedness of the Borrower to
the Superior Lender; or (iv) release of the Borrower or any endorser, guarantor
or other person from any liability on any indebtedness of the Borrower to the
Superior Lender, all of which events the Subdebt Holder consents and agrees that
the Agent and the Superior Lender may take, in its or their sole discretion, at
any time and from time to time without notice to the Subdebt Holder, which
notice is expressly waived.
6. Invalidity of Superior Indebtedness. No invalidity, irregularity or
unenforceability of all or any part of the Superior Indebtedness or of any liens
or security interests now or hereafter held by the Superior Lender to secure
payment of any Superior Indebtedness shall affect, impair or be a defense to
this Agreement.
7. Instrument Legend. The Subordinated Debt will, on the date hereof, be
inscribed with the following legend conspicuously indicating that payment
thereof is subordinated to the claims of the Superior Lender pursuant to the
terms of this Agreement:
THIS [INSERT TITLE TO SUBORDINATED DEBT INSTRUMENT] IS SUBJECT TO THE
TERMS OF A SUBORDINATION AGREEMENT AS FROM TIME TO TIME AMENDED, RESTATED,
SUPPLEMENTED OR OTHERWISE MODIFIED, DATED AS OF MARCH __, 1998 AMONG
NATIONSBANK, NATIONAL ASSOCIATION, AS AGENT FOR VARIOUS LENDERS, AND
CULTURAL ACCESS WORLDWIDE, INC. THIS ______________ MAY NOT BE AMENDED OR
MODIFIED WITHOUT THE CONSENT OF THE LENDERS.
L-5
<PAGE>
The Borrower agrees that neither the Subordinated Debt nor the Subdebt Agreement
may be amended without the written consent of all Lenders.
8. Reliance. This Agreement is a continuing one, and all Superior
Indebtedness to which it applies or may apply under the terms hereof shall
conclusively be presumed to have been created in reliance hereon.
9. False Statements. In the event of a breach by any party hereto of any
of the provisions of this Agreement, or in the event any representation or
warranty contained herein or furnished to the Agent or the Superior Lender by
any party hereto shall prove to have been false when made, the Agent and the
Superior Lender shall have all rights provided to it and them under law or
equity, including without limitation the right to sue the breaching party or
parties to recover damages suffered by the Agent or the Superior Lender as a
result of such breach, and the right to obtain injunctive relief.
10. Fees and Expenses. The Borrower hereby agrees to pay upon demand all
attorneys' fees and expenses reasonably incurred by the Agent or the Superior
Lender in connection with the enforcement of its or their rights hereunder.
L-6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
NATIONSBANK, NATIONAL ASSOCIATION
as Agent
By:
Name:
Title: Vice President
WITNESS: [INSERT NAME OF SUBDEBT HOLDER]
By:___________________________________
_____________________ Name:_________________________________
Title:________________________________
_____________________
WITNESS: CULTURAL ACCESS WORLDWIDE, INC.
By:___________________________________
_____________________ Name:_________________________________
Title:________________________________
_____________________
L-7
<PAGE>
EXHIBIT M
Form of Subordination Provisions
(Earnouts)
1. Subordination.
(a) The following terms shall have the following meanings:
(i) "Subordinated Obligations" shall mean all amounts payable
in cash by CulturalAccessWorldwide, Inc. or a subsidiary (the
"Obligor") to a Person (the "Seller") pursuant to an agreement (the
"Purchase Agreement") entered into in connection with the
acquisition of assets of or the business owned by such Person (the
"Acquired Business") which amounts are determined based on the
results of operations of the Acquired Business, direct or indirect,
absolute or contingent, due or to become due, now existing or
hereafter arising pursuant to the terms of the Purchase Agreement or
related acquisition documents; and
(ii) "Superior Indebtedness" as used herein shall mean all
indebtedness, now existing or hereafter created, of the Obligor to
NationsBank, N.A. (the "Superior Lender") (or to any financial
institution owning or holding a participation interest or an
assignment of an undivided interest in the promissory note of
Cultural Access Worldwide, Inc. (the "Borrower")), arising under or
in connection with the Credit Agreement dated April 9, 1998 relating
to the revolving loans made from time to time to the Borrower
pursuant to the terms and conditions thereof. The Superior
Indebtedness shall include amounts accruing subsequent to the filing
of any bankruptcy, receivership, insolvency or like petition.
(b) The payment and performance of each of the Subordinated
Obligations is and shall be expressly subordinate and junior in right of
payment to the Superior Indebtedness.
(c) So long as any part of the Superior Indebtedness remains
outstanding and until the Credit Agreement shall have been terminated and
the Note (as defined in the Credit Agreement) fully and finally paid and
satisfied, the Seller will not either accept payment of the Subordinated
Obligations, other than as provided in Section 2(a), but only so long as
no Default or Event of Default exist under the Credit Agreement, in any
manner whatsoever or take any action (i) to accelerate any of the
Subordinated Obligations, (ii) to collect payment of any of the
Subordinated Obligations, or (iii) to foreclose, take any action or
otherwise realize (whether by judicial action, under power of sale or by
self-help repossession or otherwise) on any security or guaranty given by
any Person to secure or guarantee any of the Subordinated Obligations
including without limitation any actions or remedies of the Seller set
forth in the Purchase Agreement.
M-1
<PAGE>
(d) The Seller agrees that it will not after the date hereof accept,
assert or permit to be created a Lien in any property of the Obligor as
security for the payment or performance of any of the Subordinated
Obligations.
(e) In the event of any distribution, division or application,
partial or complete, voluntary or involuntary, by operation of law or
otherwise, of all or any part of the assets of the Obligor or the proceeds
thereof to creditors of the Obligor or upon any indebtedness of the
Obligor, by reason of the liquidation, dissolution or other winding up of
the Obligor or any of their business, or in the event of any sale,
receivership, insolvency or bankruptcy proceeding, or assignment for the
benefit of creditors, or any proceeding by or against the Obligor for any
relief under any bankruptcy or insolvency law or laws relating to the
relief of debtors, readjustment of indebtedness, reorganizations,
compositions or extensions, then and in any such event any payment or
distribution of any kind or character, either in cash, securities or other
property, which shall be payable or deliverable upon or with respect to
any or all of the Subordinated Obligations shall be paid or delivered
directly to the Superior Lender for application on any Superior
Indebtedness, due or not due, until such Superior Indebtedness of the
Obligor to the Superior Lender shall have been finally and fully paid and
satisfied and the Note shall have been canceled. Subject to the limitation
set forth in Section 1(c) the Seller agrees that it will not file any
claim in bankruptcy or an involuntary proceeding, receivership or other
similar action without expressly acknowledging and agreeing in writing in
any filing or proceeding that its claim is subordinate in all respects to
the Superior Indebtedness.
(f) Except as provided in Section 1(c), should any payment or
distribution or security or proceeds thereof be received by the Seller
upon or with respect to any of the Subordinated Obligations prior to the
full and final payment and satisfaction of all Superior Indebtedness and
cancellation of the Note, such party will forthwith deliver the same to
the Superior Lender in precisely the form received (except for the
endorsement or assignment of such party where necessary) for application
on any Superior Indebtedness, due or not due, and, until so delivered, the
same shall be held in trust by such party as property of the Superior
Lender and shall not be commingled with any other funds or property such
party or any other Person. In the event of the failure of the Seller to
make any such endorsement or assignment, the Superior Lender, or any of
its officers or employees on behalf of the Superior Lender, is hereby
irrevocably authorized and appointed attorney-in-fact to make the same.
(g) The Seller agrees not to pledge, sell, assign or transfer to
others any claim it has or may have against the Obligor while any Superior
Indebtedness remains unpaid or the Note remain outstanding.
2. Permitted Payments.
(a) So long as part of the Superior Indebtedness remains outstanding
and until such time as the Superior Lender provides the Seller with
written notice that a Default or Event of Default (as defined in the
Credit Agreement) has occurred (a "Default Notice"), the Obligor may make
and the Seller may receive payments of the Subordinated Obligations;
M-2
<PAGE>
provided, however, that the Seller shall not be entitled to receive such
payments if after given effect to the payment a Default or Event of
Default exist under the Credit Agreement. Upon the occurrence of an Event
of Default, the Obligor may not make, and the Seller may not receive
payments of the Subordinated Obligations. The Superior Lender, in its
discretion, may issue a Default Notice with respect to each and every such
Default or Event of Default that occurs, but shall not have the right to
issue more than one Default Notice with respect to any particular Default
or Event of Default; provided, however, that if a Default or Event of
Default has been cured or waived (or deemed waived as provided below), but
subsequently reoccurs, then a new Default Notice may be sent with respect
thereto. In the event that all Defaults and Events of Default shall be
cured or waived, then the Borrower may resume the making of payments
otherwise permitted hereunder, subject to the terms hereof.
(b) Except as expressly set forth above, the Seller, prior to the
final payment and satisfaction in full in cash of the Superior
Indebtedness and the termination of all financing arrangements between the
credit parties and the Superior Lender in connection with the Credit
Agreement (including letters of credit), shall have no right to enforce
any payment with respect to the Subordinated Obligations, or to otherwise
take any action against any Subordinated Obligations credit party or any
of their respective assets in connection therewith.
(c) It is understood and agreed by the Seller that payments of the
Subordinated Obligations other than as expressly permitted in this Section
2 shall not be permitted.
3. Consents to the Superior Lender's Acts. The Seller acknowledges and
agrees that the covenants and agreements made in this Agreement shall continue
in full force and effect until the Superior Indebtedness is paid in full
notwithstanding any act or failure to act by the Superior Lender, including by
way of example and not by limitation: (i) refinancing, modification, amendment,
rearrangement, postponement, extension, renewal, acceleration or demand for
payment of the Superior Indebtedness in whole or in part and as often as the
Superior Lender may wish; (ii) waiver, failure to enforce, surrender,
impairment, modification or exchange of any of its or their rights under any of
the Note, the Credit Agreement or any other instruments evidencing, relating to,
securing or guaranteeing any of the Obligor's indebtedness to the Superior
Lender; (iii) settlement, release (by operation of law or otherwise), compound,
compromise, collection or liquidation, in any manner, of any indebtedness of the
Obligor to the Superior Lender; or (iv) release of the Obligor or any endorser,
guarantor or other person from any liability on any indebtedness of the Obligor
to the Superior Lender, all of which events the Seller consents and agrees that
the Superior Lender may take, in its sole discretion, at any time and from time
to time without notice to the Seller, which notice is expressly waived.
M-3
<PAGE>
Schedule 3.6
Information Regarding Collateral
See attached page.
S-1
<PAGE>
Schedule 6.4
Subsidiaries and Investments in Other Persons
<PAGE>
CulturalAccessWorldwide
Office
Landlord Landlord Address
-------- ----------------
Corporate - VA
Charles E. Smith Management, Inc. 2345 Crystal Drive
Crystal City
Arlington, VA 22202
TELAC -VA
Charles E. Smith Management, Inc. 2345 Crystal Drive
Crystal City
Arlington, VA 22202
TELAC - TX
LaSalle Partners 14755 Preston Road
Suite 125
Dallas, TX 75240
TMS-FL
TCEP II Properties Limited Partnership
A Texas Limited Partnership
MCG-CA
Land of the Free, L.P. 640 South San Vicente Boulevard
A California Limited Partnership Los Angeles, CA 90048
Phoenix Marketing Group - NJ
Phoenix Realty Partners One Phoenix Drive
Lincoln Park, NJ 07035
<PAGE>
Schedule 6.4
Subsidiaries
1. Ash Creek, Inc.
Organizational form: Corporation
Authorized stock: 1,000 Common Stock, $.01 par
Issued Stock: 1,000 to CulturalAccessWorldwide, Inc.
2. Phoenix Marketing Group (Holdings), Inc.
Organizational form: Corporation
Authorized stock: 1,000 shares Common Stock, $01 par
Issued Stock: 1,000 shares to CulturalAccessWorldwide, Inc.
3. TLM Holdings Corp.
Organizational form: Corporation
Authorized stock: 1,000 shares Common Stock, $.01 par
Issued Stock: 1,000 shares to CulturalAccessWorldwide, Inc.
4. Hispanic Market Connections, Inc.
Organizational ton: Corporation
Authorized stock: 1,000,000 Common Stock, $.01 par
1,000,000 Preferred Stock
Issued Stock: 100,000 Common Stock to CulturalAccessWorldwide, Inc.
5. Sturges Pond, Inc.
Organizational form: Corporation
Authorized stock: 1,000 shares Common Stock, $.01 par
Issued Stock: 1,000 shares to TIM Holdings Corp.
6. TeleManagement Services, Inc.
Organizational form: Corporation
Authorized stock: 1,000 shares Common Stock, $901 par
Issued Stock: 1,000 shares to TLM Holdings Corp.
<PAGE>
Schedule 6.6
Indebtedness
See attached
<PAGE>
Loan Covenants.XLS Debt Schedule 6.6 3/12/98 4:13 PM
<TABLE>
<CAPTION>
TelAc TMS HMC Phoenix Total
<S> <C> <C> <C> <C> <C>
Rent expense 600-7210-000 189,638 189,838
Mail equipment rental 500-7110-000 13,343 13,343
Office lease expense VA 600-7210-001 441,633 441,633
Office lease expense TX 600-7210-002 95,921 95,921
Office lease expense CAW 600-7210,009 13,988 13,988
Equipment leases VA 600-7110-001 54,179 54,179
Equipment leases TX 600-7110-002 25,399 25,399
Equipment leases CAW 600-7110,009 2,767 2,767
Rent expense 60,114 60,114
Equipment leases 3,236 3,236
Ryerson rent 55-4110 25,200 25,200
Equipment rental 7350-000 15,987 15,987
Equipment rental ops 7350-7100 4,370 4,370
Rent Expense 7500-0000 (12,172) (12,172)
Rent Expense 7500-9810 88,620 68,620
Total Lease / Rent 633,887 202,981 63,350 102,005 1,002,223
6% convertible note due 1/15/2000
principal due in annual installs of
$433,333 beginning 1115/98 1,300,000 1,300,000
6% convertible note due 4/1/2000
principal due in equal installments
of $60,000 beginning 4/1/98 180,000 180,000
6,5% subordinated promissory note
HMC; principal due in quarterly
installments of $20,000 plus interest
at 6,5% per year payable quarterly, 240,000 240,000
Capital lease payable in monthly installments 4,812 4812
of $289 through September, 1999
Capital lease payable in monthly installments 7,618 7,618
of $345 through January, 2000
Capital lease payable in monthly installments 25,260 25,259
of $1276 through November 30, 1999.
Capital lease payable in installments 58,279 58,278
of $2029 through November, 2000
Restrictive covenant 53,987 53,986
--------------------------------------------------------------
Total Debt 180,000 1,300,000 252,430 137,526 1,889,953
Less: current portion 60,000 563,819* 85,696 64,244 773,759
--------------------------------------------------------------
120,000 736,181 166,734 73,282 1,096,194
==============================================================
Fixed Asset Value of Capitalized Leases
Forklift 1 27,645 27,645
Forklift 2 64,286 64,286
LA Furniture 8,308 8,308
Colonial Furniture 5,824 5,824
- -------------------------------------------------------------------------------------------------------------
Total - - 14,132 91,931 106,063
- -------------------------------------------------------------------------------------------------------------
Accumulated Depreciation 79 (658) (579)
- -------------------------------------------------------------------------------------------------------------
- 14,211 91,273 105,484
=============================================================================================================
</TABLE>
* $563,819 was paid in January 1998
<PAGE>
Schedule 6.7
Liens.
Date filed
No. /
Debtor Secured Party Collateral Jurisdiction
- ------ ------------- ---------- ------------
PM Acquisition Corp. Phoenix Marketing Real Estate 11/20/97
One Phoenix Drive Group, Inc. located at Lots #97118
Lincoln Park, NJ 07035 c/o Phoenix Realty 45,46,47,48 Morris county, NJ
Partners Block 3 Tax map
of Lincoln Park
Phoenix Marketing National Office 5/27/94
Group Inc. Westminster Equipment #68117
One Phoenix Drive Bank, NJ Morris County, NJ
Lincoln Park, NJ 07035
Phoenix Marketing Astra Merck, Inc. All documents 9/28/96
Group Inc. and inventory #071288
One Phoenix Drive pursuant to Morris County, NJ
Lincoln Park, NJ 07035 Service
Agreement dated
3/31/94
Hispanic Market Nations Credit Office 9/19/96
Connections, Inc. Commercial Corp. Equipment #9623360096
5150 El Casino Real, CA Sec of State
Suite D-1l
Los Altos, CA 95121
Hispanic Market Colonial Pacific Office 2/6/97
Connections, Inc. Leasing Equipment #9704460378
5150 El Casino Real, CA Sec of State
Suite D-1l
Los Altos, CA 95121
Telephone Access, Inc. Minolta Business Minolta Copiers 5/28/97
2200 Clarendon Blvd, Systems #58238
Suite 1109 Arlington County,
Arlington, VA 22201 VA
Telephone Access, Inc. Minolta Business Minolta Copiers 5/27/97
2200 Clarendon Blvd, Systems #970527701
Suite 1109 VA state
Arlington, VA 22201 Corporation
Commission
Phoenix Marketing National Office 6/2/94
Group, Inc. Westminster Bank NJ Equipment #1573876
One Phoenix Drive NJ Sec of State
Lincoln Park, NJ
Phoenix Marketing Safeco Credit Truck, battery 11/30/95
Group, Inc. Company, Inc. & charger #1542140
One Phoenix Drive d/b/a Safeline NJ Sec of State
Lincoln Park, NJ Leasing
<PAGE>
Date filed
No. /
Debtor Secured Party Collateral Jurisdiction
- ------ ------------- ---------- ------------
Phoenix Marketing Eaton Financial Office 5/11/94
Group, Inc. Corporation Equipment #1570072
One Phoenix Drive NJ Sec of State
Lincoln Park, NJ
Phoenix Marketing Crown Credit Truck, battery 12/7/94
Group, Inc. Company & charger #1606998
600 Ryerson Road NJ Sec. of State
Lincoln Park, NJ
Phoenix Marketing Crown Credit Truck, battery 11/14/97
Group, Inc. company & charger #1801860
Beaver Brook Road NJ Sec. of State
Lincoln Park, NJ
Phoenix Marketing Crown Credit Truck 12/16/97
Group, Inc. Company #1806568
Beaver Brook Road NJ Sec. of State
Lincoln Park, NJ
Phoenix Marketing Crown Credit Equipment, 12/9/94
Group, Inc. Company including #1607428
products and NJ Sec. of State
proceeds
Phoenix Marketing Astra Merck Inc. All documents 8/28/96
Group, Inc. and inventory #1719273
One Phoenix Drive pursuant to NJ Sec. of State
Lincoln Park, NJ Service
Agreement dated
3/31/94
Phoenix Marketing Pitney Bowes Credit All equipment 8/21/95
Group, Inc. Corporation subject to #1658239
One Phoenix Drive lease #2186567- NJ Sec. of State
Lincoln Park, NJ 006
Phoenix Marketing Pitney Bowes Credit All equipment 2/23/93
1 Phoenix Drive Corporation subject to #1498219
Lincoln Park, NJ lease #2186567- NJ Sec. of State
005
Phoenix Marketing Pitney Bowes Credit All equipment 8/23/93
1 Phoenix Drive Corporation subject to #1526746
Lincoln Park, NJ lease #2265676- NJ Sec. of State
0001
Phoenix Marketing Advanta Leasing Addressing & 9/21/93
1 Phoenix Drive barcoding #1531464
Lincoln Park, NJ system NJ Sec. of State
Phoenix Marketing MCS Business Office 11/7/94
One Phoenix Drive Machines, Inc. equipment #1601733
Lincoln Park, NJ NJ Sec. of State
PM Acquisition Corp. Phoenix Marketing All assets 11/5/97
One Phoenix Drive Group, Inc. c/o #1800833
Lincoln Park, NJ Phoenix Realty NJ Sec of State
Partners
<PAGE>
Date filed
No. /
Debtor Secured Party Collateral Jurisdiction
- ------ ------------- ---------- ------------
Telemanagement Services AT&T Capital Office 9/10/96
4901 NW 17th Way #601 Leasing Services, Equipment and #960000198791
Ft. Lauderdale, FL Inc. All assets FL Sec of State
Telemanagement Services AT&T Capital Partial release 6/23/97
4901 NW 17th Way #601 Leasing Services, of assets other #970000137308
Ft. Lauderdale, FL Inc. than office FL Sec of State
equipment from
#960000198791
<PAGE>
Schedule 6.8
Taxes
None
<PAGE>
Schedule 6.10
Litigation
None
<PAGE>
Schedule 6.18
Environmental Laws
None
<PAGE>
Schedule 6.21
Security Interests
See attached.
S-8
<PAGE>
CULTURAL ACCESS WORLDWIDE, INC.
UCC-1 Filing Schedule
- --------------------------------------------------------------------------------
Debtor Name(s) Jurisdiction File Number File Date
- --------------------------------------------------------------------------------
Cultural Access Worldwide, Inc. Texas,
Secretary of State
TelAc
(a d/b/a of Cultural Access
Worldwide, Inc.)
Telephone Access, Inc.
(a d/b/a of Cultural Access
Worldwide, Inc.)
TelAc Teleservices Group
(a dlb/a of Cultural Access
Worldwide, Inc.)
- --------------------------------------------------------------------------------
Cultural Access Worldwide, Inc. Virginia,
Secretary of State
TelAc
(a d/b/a of Cultural Access
Worldwide, Inc.)
Telephone Access, Inc.
(a d/b/a of Cultural Access
Worldwide, Inc.)
TelAc Teleservices Group
(a d/b/a of Cultural Access
Worldwide, Inc.)
- --------------------------------------------------------------------------------
<PAGE>
Cultural Access Worldwide, Inc. Virginia,
Arlington County
TelAc
(a d/b/a of Cultural Access
Worldwide, Inc.)
Telephone Access, Inc.
(a d/b/a of Cultural Access
Worldwide, Inc.)
TelAc Teleservices Group
(a d/b/a of Cultural Access
Worldwide, Inc.)
- --------------------------------------------------------------------------------
Ash Creek, Inc. Delaware,
Secretary of State
- --------------------------------------------------------------------------------
TLM Holdings Corp. Pennsylvania.
Secretary of State
- --------------------------------------------------------------------------------
TLM Holdings Corp. Pennsylvania,
Montgomery Co.
- --------------------------------------------------------------------------------
Sturges Pond. Inc. Delaware,
Secretary of State
- --------------------------------------------------------------------------------
Phoenix Marketing Group New Jersey,
(Holdings), Inc. Secretary of State
Phoenix Marketing Group, Inc.
(a d/b/a of Phoenix Marketing
Group (Holdings), Inc.
CulturalAccessWorldwide
(a d/b/a of Phoenix Marketing
Group (Holdings), Inc.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
Phoenix Marketing Group New Jersey,
(Holdings), Inc. Morris County
Phoenix Marketing Group, Inc.
(a d/b/a of Phoenix Marketing
Group (Holdings), Inc.
CulturalAccessWorldwide
(a d/b/a of Phoenix Marketing
Group (Holdings), Inc.
- --------------------------------------------------------------------------------
TeleManagement Services, Inc. Florida,
Secretary of State
Professional Markets Group
(a d/b/a of TeleManagement
Services, Inc.)
CulturalAccessWorldwide
(a d/b/a of TeleManagement
Services, Inc.)
- --------------------------------------------------------------------------------
Hispanic Market Connections, Inc. California,
Secretary of State
Market Connections Group
(a d/b/a of Hispanic Market
Connections, Inc.)
CulturalAccessWorld
(a d/b/a of Hispanic Market
Connections, Inc.)
- --------------------------------------------------------------------------------
Hispanic Market Connections, Inc. California,
Los Angeles County
Market Connections Group
(a d/b/a of Hispanic Market
Connections, Inc.)
CulturalAccessWorld
(a d/b/a of Hispanic Market
Connections, Inc.)
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
Hispanic Market Connections, Inc. California,
Santa Clara County
Market Connections Group
(a d/b/a of Hispanic Market
Connections, Inc.)
CulturalAccessWorld
(a d/b/a of Hispanic Market
Connections, Inc.)
- --------------------------------------------------------------------------------
Hispanic Market Connections, Inc. New York,
Secretary of State
Market Connections Group
(a d/b/a of Hispanic Market
Connections, Inc.)
CulturalAccessWorld
(a d/b/a of Hispanic Market
Connections, Inc.)
- --------------------------------------------------------------------------------
Hispanic Market Connections, Inc. New York,
New York County
Market Connections Group
(a d/b/a of Hispanic Market
Connections, Inc.)
CulturalAccessWorld
(a d/b/a of Hispanic Market
Connections, Inc.)
- --------------------------------------------------------------------------------
4
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,284,444
<SECURITIES> 0
<RECEIVABLES> 10,138,619
<ALLOWANCES> 233,746
<INVENTORY> 0
<CURRENT-ASSETS> 16,750,339
<PP&E> 5,102,519
<DEPRECIATION> 0
<TOTAL-ASSETS> 57,773,142
<CURRENT-LIABILITIES> 8,909,730
<BONDS> 0
6,559,443
0
<COMMON> 89,723
<OTHER-SE> 41,435,954
<TOTAL-LIABILITY-AND-EQUITY> 57,773,142
<SALES> 15,691,210
<TOTAL-REVENUES> 15,691,210
<CGS> 9,109,758
<TOTAL-COSTS> 9,109,758
<OTHER-EXPENSES> 5,204,553
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (20,665)
<INCOME-PRETAX> 910,944
<INCOME-TAX> 397,909
<INCOME-CONTINUING> 513,035
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 513,035
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
